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Judging the Risk of Banks : What Makes Banks Opaque?, Research Paper 9805

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Judging the Risk of Banks : What Makes Banks Opaque?, Research Paper 9805

DATE: March 1998

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ABSTRACT: We argue that the risk of banks is hard for outsiders to judge because the risk of their mostly financial assets is either hard to measure (opaque) or easy to change. We report evidence that bond rating agencies seem to disagree more over banks than over other types of firms. Among banks, bond raters disagree more over opaque assets, like loans, and easily substitutable assets, like cash and trading assets. Fixed assets, like premises, reduce disagreement. Capital also reduces disagreement, but only at trading banks, where the risk of asset shifting may be most severe.

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Morgan, Donald P. (Donald Patrick). "Judging the Risk of Banks : What Makes Banks Opaque?, Research Paper 9805," Research Papers (Federal Reserve Bank of New York) (March 1998). https://fraser.stlouisfed.org/title/6570/item/615596, accessed on March 23, 2023.

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SUBJECTS:

THEMES: CLASSIFICATION:
  • jel: G20
  • jel: G21
  • jel: G28
  • lcc: HG136 .R45 no.9805
IDENTIFIERS:
  • oclc: 39107329
  • repec: fip:fednrp:9805
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