Does Citizens’ Financial Literacy Relate to Bank Financial Reporting Transparency?
研究发现，美国各州公民的金融素养越高，该州银行的贷款损失准备金操纵程度越低，即财务报告更透明，且这种关系在零售存款和消费贷款较多的银行中更强。
In this study, we examine the relationship between financial literacy and bank financial reporting transparency for a sample of banks from the U.S. Following prior literature, we employ discretionary loan loss provisions (DLLP) as our primary measure of bank reporting transparency. We argue that the financial literacy of their customers can influence bank managers’ behaviors with respect to both the mechanics of the loan loss provisioning and their opportunistic actions. Financially literate customers represent more stable sources of funding and have more predictable loan loss provisioning that contributes to more persistent earnings. Financial literacy could also enhance customers’ ability to indirectly follow and monitor bank performance and risk-taking. Therefore, bank managers will be less likely to engage in opportunistic earnings manipulation. Following these arguments, we predict that citizens’ financial literacy is positively associated with bank financial reporting transparency. Consistent with our prediction, we find that the magnitude of bank DLLP is negatively related to state-level financial literacy. Moreover, the association between financial literacy and DLLP is higher for banks with more retail deposits and larger consumer loans, the two channels through which financial literacy could influence bank transparency.