Bank disclosure and market assessment of financial fragility

Evidence from Turkish banks' equity prices

M.F. Penas, G. Tumer-Alkan

Research output: Contribution to journalArticleScientificpeer-review

Abstract

In this paper we explore whether Turkish banks with worsening indicators of financial fragility were subject to market monitoring during the years leading to the 2000/2001 crisis, and how the quality and timeliness of the disclosure affect market reaction. We find that shareholders reacted negatively to indicators of financial fragility such as increases in maturity mismatches, currency mismatches, and non-performing loans, showing shareholders’ concerns about the impact of financial fragility indicators on future profits. We also find that audited statements that show larger reporting lags, are not informative, pointing to the need of improving their timeliness. Finally, our study suggests that the finding that securities prices react to financial fragility indicators should not be taken as sufficient evidence of banks’ safety and soundness.
Original languageEnglish
Pages (from-to)159-178
JournalJournal of Financial Services Research
Volume37
Issue number2-3
Publication statusPublished - 2010

Fingerprint

Disclosure
Equity prices
Financial fragility
Timeliness
Shareholders
Non-performing loans
Safety
Security price
Maturity
Market reaction
Monitoring
Lag
Profit
Mismatch
Currency mismatch

Cite this

@article{b01e42f5c4ac4fb48acc71e268a86882,
title = "Bank disclosure and market assessment of financial fragility: Evidence from Turkish banks' equity prices",
abstract = "In this paper we explore whether Turkish banks with worsening indicators of financial fragility were subject to market monitoring during the years leading to the 2000/2001 crisis, and how the quality and timeliness of the disclosure affect market reaction. We find that shareholders reacted negatively to indicators of financial fragility such as increases in maturity mismatches, currency mismatches, and non-performing loans, showing shareholders’ concerns about the impact of financial fragility indicators on future profits. We also find that audited statements that show larger reporting lags, are not informative, pointing to the need of improving their timeliness. Finally, our study suggests that the finding that securities prices react to financial fragility indicators should not be taken as sufficient evidence of banks’ safety and soundness.",
author = "M.F. Penas and G. Tumer-Alkan",
year = "2010",
language = "English",
volume = "37",
pages = "159--178",
journal = "Journal of Financial Services Research",
issn = "0920-8550",
publisher = "Springer Netherlands",
number = "2-3",

}

Bank disclosure and market assessment of financial fragility : Evidence from Turkish banks' equity prices. / Penas, M.F.; Tumer-Alkan, G.

In: Journal of Financial Services Research, Vol. 37, No. 2-3, 2010, p. 159-178.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Bank disclosure and market assessment of financial fragility

T2 - Evidence from Turkish banks' equity prices

AU - Penas, M.F.

AU - Tumer-Alkan, G.

PY - 2010

Y1 - 2010

N2 - In this paper we explore whether Turkish banks with worsening indicators of financial fragility were subject to market monitoring during the years leading to the 2000/2001 crisis, and how the quality and timeliness of the disclosure affect market reaction. We find that shareholders reacted negatively to indicators of financial fragility such as increases in maturity mismatches, currency mismatches, and non-performing loans, showing shareholders’ concerns about the impact of financial fragility indicators on future profits. We also find that audited statements that show larger reporting lags, are not informative, pointing to the need of improving their timeliness. Finally, our study suggests that the finding that securities prices react to financial fragility indicators should not be taken as sufficient evidence of banks’ safety and soundness.

AB - In this paper we explore whether Turkish banks with worsening indicators of financial fragility were subject to market monitoring during the years leading to the 2000/2001 crisis, and how the quality and timeliness of the disclosure affect market reaction. We find that shareholders reacted negatively to indicators of financial fragility such as increases in maturity mismatches, currency mismatches, and non-performing loans, showing shareholders’ concerns about the impact of financial fragility indicators on future profits. We also find that audited statements that show larger reporting lags, are not informative, pointing to the need of improving their timeliness. Finally, our study suggests that the finding that securities prices react to financial fragility indicators should not be taken as sufficient evidence of banks’ safety and soundness.

M3 - Article

VL - 37

SP - 159

EP - 178

JO - Journal of Financial Services Research

JF - Journal of Financial Services Research

SN - 0920-8550

IS - 2-3

ER -