Deposit Supply and Bank Transparency

Given the importance of transparency for the governance, efficiency, and stability of banks, we evaluate whether economic shocks that relax a bank’s dependence on external capital markets alter the cost-benefit calculations of bank managers concerning voluntary information disclosure. We measure information disclosure based on 10-K filings, 8-K filings, earnings guidance, and stock market liquidity. As a funding shock, we use unanticipated technological innovations that triggered shale development and deposit booms. Greater exposure to shale development reduced information disclosure, suggesting that deposit windfalls relax the incentives for managers to disclose information to attract funds.