The relevance of Spanish local financial reporting to credit institution decisions: An empirical study

Financial reporting information had been aimed mainly at internal users and audit offices, but this has changed in recent years. Potential users have widened, among whom we should mention certain financial institutions, owing to their particular relevance. In this context, based on a sample of 54 credit institutions, this study aims to obtain evidence on the information that is shown to be useful to these users in their decision‐making, by looking at the Spanish financial reports. A study is also made of causes that restrict the usefulness of local financial information, along with possible suggestions to make this information more useful to credit institutions. The results reveal that owing mainly to legal reasons, the profit and loss account and the balance sheet are the least relevant financial statements to credit institutions’ indebtedness operation decision making. Likewise, it is obvious that current local financial information needs to become more opportune, reliable, complete and understandable.