Koenig, Philipp; Laux, Christian; Pothier, David - 2021
The general view underlying bank regulation is that bank disclosures provide market discipline and reduce banks’ risk …-taking incentives. We show that bank disclosures can increase bank leverage and bank risk. The reason stems from the interaction between … insured and uninsured debt. Bank disclosures reduce the agency problem between uninsured debt and equity, thereby lowering the …