Bank risk and charter value: the role of opacity Online publication date: Fri, 23-Apr-2021
by Chris Brune; Kevin Lee; Scott Miller
International Journal of Banking, Accounting and Finance (IJBAAF), Vol. 12, No. 2, 2021
Abstract: In this paper, we explore the linkage between bank opacity and bank charter value. We find that opacity contaminates charter value and therefore reduces the ability of charter value to restrain risk-taking in banking. As bank assets become more complex and opaque with the increased use of derivative assets like mortgage backed securities, asset backed securities, and collateralised debt obligations, etc., it becomes more difficult to gauge the true value of banks and the true risk of the bank activities.
Online publication date: Fri, 23-Apr-2021
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