Accounting Information Quality , Interbank Competition , and Bank Risk Taking

@inproceedings{Corona2014AccountingIQ,
  title={Accounting Information Quality , Interbank Competition , and Bank Risk Taking},
  author={Carlos Corona},
  year={2014}
}
We study the interaction between interbank competition and accounting information quality and their effects on banks’ risk-taking behavior. We identify an endogenous false-alarm cost that banks incur when forced to sell assets to meet capital requirements. We find that when the interbank competition is less intense, an improvement in the quality of accounting information encourages banks to take more risk. Keeping the banks’ investments in loans constant, the provision of high-quality… CONTINUE READING