Research On The Effect Of The Disclosure Quality On The Stability Of The Listed Banks

The bad quality of banks’ information can lead to the occurrence and the spread of financial crisis. Because investors cannot judge the risk faced by the bank, they choose to withdraw the loan with the system pressure to them. And the subprime mortgage crisis caused by information asymmetry is the most powerful proof. The system of information disclosure in China was formed late. Most of the studies are aimed at the content of the disclosure, and researches of the quality of the disclosure are few. With the quality of disclosure gradually optimized, the stability of banks is increasing over time. The relationship between the quality of disclosure and the stability of banks is explored, and the factors of bank stability are considered in a new way. Through empirical analysis, this paper proves that the quality of disclosure has positive effect on the stability of banks, which is that the effect of the quality of disclosure is enhanced with the increase of the bank’s scale.Firstly, this paper analyzes the direct influence factors of the stability of China’s commercial banks and the mechanism of the information disclosure. Investors need information about the risks of the bank investment projects, so that they can effectively assess the risks and take risks. If the crisis occurs, investors do not have enough information to assess the risk, and it will lead to increased financial costs, exacerbating the crisis. This fact can lead to the market discipline mechanism out of normal, the banking system leverage increasing, and the banking system fragility increasing as well. Also, the lack of information disclosure leads to regulatory oversight, which seriously interferes with the free market intrinsic binding effect. With a lack of supervision, the bank managers likely choose the investment of high risk and high return, which would cause the increase of non-performing assets, so that the stability of the bank decreased.Secondly, the research constructs the proxy variable, in order to measure the quality of disclosure and the level of banks’ stability. Through the analysis of the theory of China’s disclosure policy, I select 20 information disclosure quality index, establish the information disclosure quality index, and select the data over the past ten years of China’s 16 listed commercial banks, and descriptive analyze our country commercial bank information disclosure quality. Then, the risk probability index of the distance bankruptcy is established, and the stability of our country’s commercial banks is analyzed. Measured respectively are the similarity and difference of state-owned banks and non-state-owned banks.Finally, a panel regression model is established. The variable sequence was tested by Unit Root Test and the correlation among sequences was tested. The effect of the quality of disclosure on bank stability is proved by estimating the coefficient of the variables. I establish the fixed effect model and carry out the Robustness Test for the model. Because of the difference between the stability of state-owned banks and nonstate-owned banks, the effect of the quality of disclosure on each is selected. Because there is a gap of the stabilities of different sized banks, commercial banks are classified by scale, and the impact of quality of disclosure on the stability of commercial banks is studied once more. According to the research results, it should be recommended that commercial banks of China strengthen the disclosure quality, and improve the accuracy of the information disclosure, improving banking supervision system, which effectively promote the growth of China’s banking industry steadily.