No One Has Any Idea What Goes On in a Bank

Here is a pleasing Bank for International Settlements working paper by Fabrizio Spargoli and Christian Upper looking into bank opacity. "Conventional wisdom maintains there are severe information asymmetries between a bank's management and outside investors," they begin, and then they check to see if that is true by looking into whether bank executives are any better at trading their own stock than anyone else. The answer is meh, not really:

One possible explanation of this result is that banks provide investors with all of the information they need to fully understand their businesses. (Banks are not opaque.) Another possible explanation is that banks' disclosure is bad, but no worse than anyone else's. (Banks are opaque but so is everyone.) A third possible explanation is that disclosed trading by officers and directors, especially at highly regulated banks, is never done with an information advantage, because the only time you feel safe trading is when you don't know any more than the market does, and you use a 10b5-1 plan to avoid making informed trades. (Banks are opaque but not in a way that can be measured by insider trading.)