Risk Disclosures in Bank’s Annual Report: Bangladesh Perspective

Mohammad Rokibul Kabir, Farid Ahammad Sobhani


A risky business climate often results in a risky investment climate. To reduce this inherent risk investors demand the financial statements to include information that is relevant in helping to accurately assess the risks and uncertainties concerning a business enterprise’s future cash flows and operating results. A bank is a financial institution that creates credit by lending money to a borrower, thereby creating a corresponding deposit on the bank’s balance sheet. Hence, a bank always faces different types of risks. Thus, the investors look for the ways a bank deals with risk which can be explored from the risk disclosures (RDs) in annual reports. Thus, this study aims at evaluating the level of RDs in the annual reports of the listed banks along with the quality of such reporting in Bangladesh. The sample of the study consists of 15 banks chosen randomly from 31 banks with more than 20 branches during the study period from 2009 to 2013. The study is based on secondary data which are collected from annual reports of the sample banks. An un-weighted dichotomous disclosure index has been prepared by dividing the RD reporting items of the banks in seven categories under the heads of Accounting policies, derivatives hedging, financial and other risks, general risks information, financial instruments, reserves and segment information. From the paper, it is measured that the information disclosure in different areas of risk unsatisfactory. Most of the banks’ RD ranges from 11 to 25 out of total score of 43. The quality of risk reporting is also poor.

Aus. Aca. Acc & Fin. Rev Vol 3(1), Jan 2017, P 11-20


Risk; Risk Disclosure; Risk Disclosure Index; Quality of Risk Disclosures; Annual Reports; Banks in Bangladesh

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