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

Sunil Poshakwale, Daniel Aghanya, Vineet Agarwal

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)
4 Downloads (Pure)

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 languageEnglish
Article number101431
Number of pages50
JournalInternational Review of Financial Analysis
Volume68
Early online date14 Dec 2019
DOIs
Publication statusPublished - 1 Mar 2020

Bibliographical note

NOTICE: this is the author’s version of a work that was accepted for publication in International Review of Financial Analysis. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Review of Financial Analysis, 68 (2020)
DOI: 10.1016/j.irfa.2019.101431

© 2019, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

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

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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