We investigate bank opaqueness by looking at the frequency of large, negative, market-adjusted returns (crashes). We analyze crashes on a sample of US stocks traded in the 1990-2007 period. Jin and Myers (2006) predict that opaqueness coupled with weak investors' protection generate more...

A model is presented that shows when (Basel Accord) capital standards and (FDIC) insurance premiums primarily reflect a bank's physical expected default losses, a bank can increase its shareholder value by making loans and investing in bonds that have relatively high systematic risk. Such an...