Competition and opacity in the financial system

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8 Scopus citations


This paper studies the effect of competition on opacity in the financial system. In my model, two financial institutions competing for investors simultaneously make a public disclosure decision when both are exposed to rollover risk. I find that in the face of rollover risk, competition between financial institutions has a nonmonotonic effect on their disclosure decisions. More intense competition can reduce disclosure and make the financial system more opaque, especially when investors’ private information about the financial institutions is sufficiently precise.

Original languageEnglish (US)
Pages (from-to)1895-1913
Number of pages19
JournalManagement Science
Issue number3
StatePublished - Mar 1 2021
Externally publishedYes

Bibliographical note

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  • Bank opacity
  • Coordination
  • Disclosure policies
  • Financial institutions
  • Higher-order beliefs
  • Interbank competition
  • Rollover risk


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