Abstract
Opacity has economy-wide implications. A lack of information, whether from non-disclosure or complexity of business, creates uncertainty that even the most sophisticated of investors must face. In this paper, I analyze the relationship between opacity and the systematic risk of bank holding companies. Specifically, I find that investments in opaque assets required to be reported at fair value significantly affect the levels of financial institutions’ systematic risk. Furthermore, I provide evidence that firm investments in opaque assets contribute to systematic risk to an even greater degree during times of financial crisis.
Recommended Citation
Bland, J. W. (2011). The Opaqueness of Fair Value Assets and Systematic Risk in the Banking Industry. Inquiry: The University of Arkansas Undergraduate Research Journal, 12(1). Retrieved from https://scholarworks.uark.edu/inquiry/vol12/iss1/7
