The banking system is known to be vulnerable to self-fulfilling crises that are caused by depositors' co-ordination failure. We show that transparency regulation may prevent certain types of systemic crisis by eliminating the possibility of coordination failure

Transparency regulation aims at reducing financial fragility by strengthening market discipline.There are however two elementary properties of banking that may render such regulation inefficient at best and detrimental at worst.First, an extensive financial safety net may eliminate the...

We study the optimal precision of public information disclosures about banks assets quality. In our model the precision of information affects banks' cost of raising funding and asset profile riskiness. In an imperfectly competitive banking sector, banks'stability and social surplus are...