Essays on financial regulations, bank opacity, and bank risks

Raz, Arisyi Fariza ORCID: 0000-0003-3698-792X (2022). Essays on financial regulations, bank opacity, and bank risks. University of Birmingham. Ph.D.

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We evaluate how various policies and financial regulations, namely why the liquidity coverage rule (LCR), state corporate tax, and the 1990s deregulation, affect US banks' opacity. First, we find that banks subject to the LCR become significantly more opaque. A separate study also shows that a tax rise provokes more discretionary earnings smoothing and increases earnings opacity. Greater opacity caused by the LCR and higher tax rates lead to higher liquidity risk as investors confidence diminishes and more likely to withdraw their money where a liquidity shock happens. Bank opacity does not only increase liquidity risk but also overall risk appetite and insolvency. The final part of our study finds that the 1990s deregulation creates complex and more opaque banks. These banks use opacity to obfuscate risk-taking activities and hide vulnerabilities arising from low levels of capitalization. Our findings contribute to the literature regarding the unintended consequences of various policies and regulations on bank opacity.

Type of Work: Thesis (Doctorates > Ph.D.)
Award Type: Doctorates > Ph.D.
Licence: All rights reserved
College/Faculty: Colleges (2008 onwards) > College of Social Sciences
School or Department: Birmingham Business School
Funders: None/not applicable
Subjects: H Social Sciences > HG Finance


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