Bank stability and transparency
Banks that disclose more information tend to be less at risk of falling into financial distress, all other things being equal. That is what Erlend Nier finds in his analysis of 550 banks from 32 countries, published in 'Bank Stability and Transparency'. This underscores the importance of transparency and market discipline for overall financial stability. Improved disclosure is able to reduce the incidence of banking crises. Hence Basel II Pillar 3 disclosures could bring major dividends for overall financial stability.