The impact of regulations on compliance costs, risk-taking, and reporting quality of the EU banks

Sunil Poshakwale; Daniel Aghanya; Vineet Agarwal

doi:10.1016/j.irfa.2019.101431

The impact of regulations on compliance costs, risk-taking, and reporting quality of the EU banks

Sunil Poshakwale, Daniel Aghanya, Vineet Agarwal

School of Economics, Finance and Accounting

Research output: Contribution to journal › Article › peer-review

Abstract

The paper examines how the Statutory Audit and Corporate Reporting Directives (SACORD) affect the compliance costs, risk taking and quality of financial reporting of the EU banks. Using a natural experiment, we find that post SACORD, both compliance costs and risk taking increase significantly. However, the implementation of additional regulations seems to be effective in terms of improved quality of financial reporting. When we analyse the impact by size, we find that smaller banks face disproportionately higher increase in compliance costs while larger banks seem to engage in greater risk taking.

Original language	English
Article number	101431
Number of pages	50
Journal	International Review of Financial Analysis
Volume	68
Early online date	14 Dec 2019
DOIs	https://doi.org/10.1016/j.irfa.2019.101431
Publication status	Published - 1 Mar 2020

Keywords

Financial regulation
Transparency
Financial system
Financial stability
Difference-in-differences

ASJC Scopus subject areas

Economics, Econometrics and Finance(all)

Access to Document

10.1016/j.irfa.2019.101431

Link to publication in Scopus

Embargoed Document

Impact of Reg on Compl Costs, Risk of EU Banks_Revised FINANA_2019_228R1
Accepted author manuscript, 152 KB
Licence: CC BY-NC-ND
Embargo ends: 14/06/21

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