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Post‐crisis bank liquidity risk management disclosure

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  • Simplice A. Asongu

Abstract

Purpose - The purpose of this paper is to investigate post‐crisis measures banks have adopted in a bid to manage liquidity risk. It is based on the fact that the financial liquidity market was greatly affected during the recent economic turmoil and financial meltdown. During the crisis, liquidity risk management disclosure was crucial for confidence building in market participants. Design/methodology/approach - The study investigates if Basel II pillar 3 disclosures on liquidity risk management are applied by 20 of top 33 world banks. Bank selection is based on information availability, geographic balance and comprehensiveness of the language in which information is provided. This information is searched from the World Wide Web, with a minimum of one hour allocated to “content search”, and indefinite time for “content analyses”. Such content scrutiny is guided by 16 disclosure principles classified in four main categories. Findings - Only 25 per cent of sampled banks provide publicly accessible liquidity risk management information, a clear indication that in the post‐crisis era, many top ranking banks still do not take Basel disclosure norms seriously, especially the February 2008 pre‐crisis warning by the Basel Committee on Banking Supervision. Research limitations/implications - Bank stakeholders should easily have access to information on liquidity risk management. Banks falling‐short of making such information available might not inspire confidence in market participants in events of financial panic and turmoil. As in the run‐up to the previous financial crisis, if banks are not compelled to explicitly and expressly disclose what measures they adopt in a bid to guarantee stakeholder liquidity, the onset of any financial shake‐up would only precipitate a meltdown. The main limitation of this study is the use of the World Wide Web as the only source of information available to bank stakeholders and/or market participants. Originality/value - The contribution of this paper to literature can be viewed from the role it plays in investigating post‐crisis measures banks have adopted in a bid to inform stakeholders on their management of liquidity risk.

Suggested Citation

  • Simplice A. Asongu, 2013. "Post‐crisis bank liquidity risk management disclosure," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 5(1), pages 65-84, April.
    • Handle: RePEc:eme:qrfmpp:v:5:y:2013:i:1:p:65-84
    DOI: 10.1108/17554171311308968
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    References listed on IDEAS

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    1. Goodhart, C., 2008. "Liquidity risk management," Financial Stability Review, Banque de France, issue 11, pages 39-44, February.
    2. Admati, Anat R & Pfleiderer, Paul, 2000. "Forcing Firms to Talk: Financial Disclosure Regulation and Externalities," The Review of Financial Studies, Society for Financial Studies, vol. 13(3), pages 479-519.
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    Cited by:

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    2. Yiannis Anagnostopoulos & Jackie Kabeega, 2019. "Insider perspectives on European banking challenges in the post-crisis regulation environment," Journal of Banking Regulation, Palgrave Macmillan, vol. 20(2), pages 136-158, June.
    3. Bakhita Hamdow Gad Elkreem Braima, 2017. "Impact of Islamic Securitization (Sukuk) on Islamic Banks Liquidity Risk in Light of Basel III Requirements," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 6(1), pages 85-100, January.

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    More about this item

    Keywords

    Post‐crisis; Liquidity; Risk management; Banks; Disclosure;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G00 - Financial Economics - - General - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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