Bank Risk and Charter Value: The Role of Opacity
Department
Business
Document Type
Article
Publication Date
4-23-2021
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.
Publication Title
International Journal of Banking, Accounting and Finance
Publisher Statement
Copyright © 2021 the Authors, Copyright © 2021 Inderscience Enterprises Ltd.
DOI
10.1504/IJBAAF.2021.10035943
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Recommended Citation
Brune, Chris, Lee, Kevin, and Miller Scott. "Bank Risk and Charter Value: The Role of Opacity," International Journal of Banking, Accounting, and Finance, Inderscience Enterprises Ltd., 12:2 (2021) Apr 23, 141-157. doi: 10.1504/IJBAAF.2021.114476