Assessment of the Pillar 3 financial and risk information disclosures usefulness to the commercial banks users

Abstract

The paper analyses usefulness of the Pillar 3 financial and risk information disclosures to the commercial banks users. The Pillar 3 are specific regulatory disclosures requirements set out in the Basel 2 framework and incorporated into EU law and subsequently laws of the member states. According to Pillar 3 intention market participants should be able to understand and subsequently judge the relevance of the bank risk position and risk management and try to discipline "risky" banks. Due to that the European authorities are focused on control and improvements of the banks’ disclosures. However, less is done as far as usefulness of the Pillar 3 risk information to the commercial banks users is. The authors try to assess at which extent is information useful for users of the banks that operate in countries where banking sectors are dominated by foreign-owned entities and depositors (sophisticated and non sophisticated; insured and uninsured; primarily non-financial ones) is a key source of market discipline. The authors focus on modelling of visitor behaviours at website where financial and risk information according to Pillar 3 requirements is available. The results show that there is in general small interest in Pillar 3 information and even financial and risk related information belongs to those where interests is the lowest one.