BANK FUNDING MOBILIZATION: THE ROLE OF FINANCIAL REPORTING TRANSPARENCY

Abstract

Based on panel data from 33 commercial banks in Vietnam during the period 2009– 2023, the study finds a negative relationship between financial reporting transparency and banks’ ability to attract customer deposits. Specifically, banks with more transparent financial disclosures tend to mobilize fewer deposits, even after controlling for bank-specific characteristics and macroeconomic conditions. This relationship remains statistically significant both in normal periods and during major macroeconomic shocks such as the global financial crisis and the Covid-19 pandemic. These findings suggest that, in certain contexts, increased transparency may expose underlying financial risks or the true quality of bank assets, thereby reducing customer trust and their willingness to deposit. This effect is particularly relevant in environments where regulatory oversight is still developing and public financial literacy is limited. Accordingly, the policy implication is that efforts to improve financial transparency should be accompanied by enhanced supervisory capacity and effective financial communication, helping the public interpret disclosures appropriately and respond constructively rather than overreacting to perceived risks.