Catherine Refait-Alexandre

Corporate disclosure: a review of its (direct and indirect) benefits and costs

This paper reviews the literature on corporate disclosure. Policymakers often support corporate disclosure but more contrasted views have emerged in the academic literature, showing that even if disclosure can actually benefits to shareholders, it is costly and it may trigger pernicious effects. Disclosing information is expensive (communication and audit costs, competitors access strategic information, and induced managers suboptimal behavior). It also generates informational costs, as firms can disclose false, manipulated, too complex or too extensive information. And disclosure can reduce actors incentives to look for information about the firm, and therefore can lead to an (potentially destabilizing) illusion of knowledge.

Are Transparent Banks More Efficient? Evidence from Russia

This study examines the relationship between bank transparency and efficiency. Using a unique data set for Russian banks, we find that transparency is important and that, among the dimensions of transparency, the transparency in board and management structure and process represents the most significant determinant. These results are controlled for size effects, the structure of liabilities, the structure of assets, and nonperforming loans. This highlights the role of transparency in improving efficiency, particularly in transition economies.

Multiple banking relationships: do SMEs mistrust their banks?

This article focuses on the use of multiple banking relationships by SMEs, a key issue given their strong dependence on bank financing in a context of increasing financial constraints and higher risk of credit rationing since the crisis. We investigate whether the use of multiple banking relationships is explained by firms’ characteristics or by the quality of the banking relationship. We exploit the results of an original survey conducted on a sample of French SMEs in December 2012. According to the traditional theoretical framework of multiple banking, we find that older, bigger, and betterperforming firms are more likely to access multiple banking relationships. We further find that innovative firms are more likely to engage in multiple banking relationships. We also highlight the explanatory power of an alternative model based on the quality of banking relationship: when the manager trusts its main bank, or when he is closer to his loan officer, the firm will be less likely to engage in multiple banking relationships.

Disclosure, Banks CDS Spreads and the European Sovereign Crisis

We investigate the impact of banks disclosure on the evolution of their CDS spreads during the European sovereign crisis. The disclosure of information help investors in building expectations so disclosure may participate into the reduction of the information risk premium and reduces CDS spread. We analyze the CDS spread changes following the announcement of sovereign credit rating downgrades. We consider 16 dates in the period 2011-2013 and for each one, we assess the cumulative abnormal CDS spread change (CASC). We build two disclosure indexes: one general and one specifically dedicated to sovereign exposure. We show that the bank exposure to sovereign risk has a positive impact on the CASC. Disclosure about sovereign exposure has a negative impact on CASC showing that information reduce risk premiums. However, the global disclosure increases the CASC; investors may disapprove the disclosure of too much abundant and broad information.

Implementing Basel Framework's Transparency Requirements in Emerging Countries: Bane or Boon?

Transparency requirements are central to the third pillar of the Basel prescriptions. The purpose of this article is to offer a simple theoretical model to analyze the impact of regulatory requirements for transparency on the balance sheet and profits of banks, focusing on the implementation of Basel’s requirements in emerging countries. We show how an increased transparency, which implies a rise in associated costs, especially operating costs, may result in lower profits for banks despite a reduced capital requirement. We also show the conditions under which these reduced profits occur, and in this respect what the consequences of the strengthened capital requirements introduced by Basel, in its third incarnation, are likely to be. We finally show that implementing Basel framework can have ambiguous effects in emerging countries, depending on parameters’ values.

Does a banking relationship help a firm on the syndicated loans market in a time of financial crisis

The volume of credit granted in the form of syndicated loans saw a marked downturn in 2008. This article seeks to understand how certain firms were nonetheless able to benefit from larger facilities or a lower interest rate than others. Using a sample of syndicated loans issued in 2008 in North America and Europe, and records of syndicated loans since 2003, we show that firms that had developed a relationship with an investment bank obtained a lower spread, but did not benefit from greater loan facilities or longer maturities.