Title: Do the media capture banking system risk? Evidence from the EU-15 countries

Authors: Vincenzo Farina; Lucrezia Fattobene; Elvira Anna Graziano

Addresses: Department of Management and Law, University of Rome 'Tor Vergata', Via Columbia 2, Rome 00133, Italy ' Department of Management, Polytechnic University of Marche, Piazzale Martelli 8, Ancona 60121, Italy ' Department of Research, Link Campus University, Via del Casale di San Pio V, Rome 44 00165, Italy

Abstract: The economic and financial crisis has highlighted the failure of banking authorities in capturing all the elements and information needed to ensure effective and sound regulation, supervision and risk management of the banking sector. Mass media are a potentially highly effective mechanism of external control on banking system. Our paper addresses a central question: do the media play a role in grabbing the banking risk-taking behaviour? Using the text-analysis technique, we develop two indices of risk coverage in relation to banking and economic issues for the EU-15 zone countries between 1998 and 2015. Then we 'test on field' both indices in relation to banking asset quality, and we find that for several countries, they are positively correlated with the financial stability indicator; on the other hand, we do not observe a widespread trend reversal which would reveal a 'watchdog' role of the media on banking riskiness.

Keywords: banking asset quality; banking risk; banking stability; media coverage.

DOI: 10.1504/IJMFA.2017.084060

International Journal of Managerial and Financial Accounting, 2017 Vol.9 No.1, pp.84 - 103

Available online: 21 Apr 2017 *

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