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The impact of voluntary capital adequacy disclosure on bank lending and liquidity creation

Lookup NU author(s): Dr Shams PathanORCiD

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Abstract

© 2020 Accounting and Finance Association of Australia and New Zealand. Using a sample of 40 US banks that make voluntary disclosure of capital adequacy, we investigate the extent to which such voluntary disclosures influence growth in bank lending and liquidity creation. Combining two theories linked to the performance effects of (i) voluntary disclosure and (ii) leverage adjustment, we document novel evidence in favour of our hypotheses: a positive relation between voluntary bank disclosure and bank lending (liquidity creation). Our analysis provides some evidence that these positive linkages occur through a cost of capital channel.

Publication metadata

Author(s): Zelenyuk N, Faff R, Pathan S

Publication type: Article

Publication status: Published

Journal: Accounting and Finance

Year: 2021

Volume: 61

Issue: 3

Pages: 3915-3935

Print publication date: 01/09/2021

Online publication date: 18/11/2020

Acceptance date: 06/10/2020

ISSN (print): 0810-5391

ISSN (electronic): 1467-629X

Publisher: John Wiley and Sons Inc.

URL: https://doi.org/10.1111/acfi.12720

DOI: 10.1111/acfi.12720

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