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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26153
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| Title: | What Constitutes Appropriate Disclosure for a Financial Conglomerate? |
| Authors: | White, Lawrence J. |
| Keywords: | Banks
Disclosure
Regulation
Basel II
Market Value Accounting
Subordinated Debt |
| Issue Date: | 22-Nov-2002 |
| Series/Report no.: | EC-03-03 |
| Abstract: | This paper addresses the disclosure issues for financial conglomerates
principally from the same perspective as that of the Basel Committee on
Banking Supervision: that disclosure is important for the safety and
soundness of banks. However, we reach substantially different
conclusions with respect to three important disclosure issues: the role
of market value accounting; the frequency of disclosures; and the role
of subordinated debt. We start by asking why any special disclosure
might be required for financial conglomerates. This question immediately
leads to a discussion of what is special about financial conglomerates.
We also address the question of, "Disclosure to whom?" There
are at least two potential audiences for information disclosures:
financial regulators; and the public investors/creditors/customers of a
financial conglomerate. Issues of the appropriate structure for a
financial conglomerate, and the information revelation that should
accompany that structure, are also raised. Finally, we return to the
title topic: What constitutes appropriate disclosure for a financial
conglomerate. Unfortunately, by turning its back on the three most
important steps that could be taken to improve information disclosure
mandating market value accounting (MVA) for banks' reports to
regulators, aiming toward daily submission of these reports, and
requiring the issuance of subordinated debt the Basel Committee has
fundamentally undermined its efforts to enhance banks' safety and soundness. |
| URI: | http://hdl.handle.net/2451/26153 |
| Appears in Collections: | Economics Working Papers
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