Stress tests and information disclosure

@article{Goldstein2018StressTA,
  title={Stress tests and information disclosure},
  author={Itay Goldstein and Yaron Leitner},
  journal={J. Economic Theory},
  year={2018},
  volume={177},
  pages={34-69}
}
We study an optimal disclosure policy of a regulator who has information about banks’ability to overcome future liquidity shocks. We focus on the following tradeoff: Disclosing some information may be necessary to prevent a market breakdown, but disclosing too much information destroys risk-sharing opportunities (Hirshleifer effect). We find that during normal times, no disclosure is optimal, but during bad times, partial disclosure is optimal. We characterize the optimal form of this partial… CONTINUE READING
Highly Cited
This paper has 26 citations. REVIEW CITATIONS

From This Paper

Figures, tables, and topics from this paper.

Explore Further: Topics Discussed in This Paper

References

Publications referenced by this paper.
Showing 1-10 of 27 references

Financial Networks: Contagion, Commitment, and Private Sector Bailouts

Leitner, Yaron
Journal of Finance, • 2005
View 4 Excerpts
Highly Influenced

Forcing Firms to Talk: Disclosure Regulation and Externalities

Admati, Anat, Paul Pfleiderer
Review of Financial Studies, • 2000
View 6 Excerpts
Highly Influenced

Comparative Cheap Talk

Gary Gorton, Bengt Holmström
Journal of Economic Theory • 2017

Information Disclosure in Financial Markets

Liyan Yang
Annual Reviews of Financial Economics • 2015

Mandatory Disclosure and Financial Contagion

Aleksander Berentsen
2015

Trans - parency in the Financial System : Rollover Risk and Crises

Joseba Martinez
Journal of Finance • 2015

Bayesian Persuasion by Stress Test Disclosure

Thilo Pausch
Working Paper . Deutsche Bundesbank • 2014
View 1 Excerpt

Similar Papers

Loading similar papers…