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This study examines how the transparency of accounting information influences banks' decisions based on their liability structure.

Transparency and Bank Liability Structure

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Model explores the impact of transparency and liability structure on banks’ funding strategies, illustrating implications for liquidations.

This study examines how the transparency of accounting information influences banks' decisions based on their liability structure.
Developed a theoretical model to analyze banks financing long-term projects with different types of deposits.
Compared outcomes of transparent versus opaque regimes regarding liquidation efficiency.
Analyzed scenarios with varying proportions of insured and uninsured deposits.
A transparent accounting regime enhances surplus and leads to efficient liquidations when insured deposits are low.
When insured deposits are high, opaque regimes may be more beneficial due to the risks of inefficient liquidations.
Banks may still prefer transparency to lower funding costs, even if overall surplus is reduced.

Jiang et al. (2026) studied this question.

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Model explores the impact of transparency and liability structure on banks’ funding strategies, illustrating implications for liquidations.