Disclosure Policies During Banking Crises

The study focuses on the investigation of the relevance of both opacity and transparency of central bank's support policies. The goal is achieved by modelling the deposit decisions as a simple two-stage game with investigation and possibility of a bank run in the middle period during crises. The equilibrium in investigation and depository decisions is found to be a separating one, where all banks with probability of default below the certain threshold would impose the absence of investigation, and only those banks were found to be susceptible to bank runs. The support policy of central bank under transparency - disclosing the names of participating banks - is found to be generally preferred to that of opacity under both very small or very large values of ether implied probability of default of non-investigated banks or liquidation value of the collateral relative to its true value. Additionally, the basis for further investigation with regards to own banks' disclosure under the opaque supporting programme is provided.