Opacity: Insurance and fragility

What are the effects of banks holding opaque, complex assets? Should regulators require bank assets to be more transparent? I study these questions in a model financial intermediation where opacity determines how long realized value an asset remains unknown. By allowing sell before realization is known, provides insurance bank's depositors. However, higher also increases depositors' incentives join run. In choosing level opacity, therefore, faces trade-off between providing and increasing fragility. If depositors can accurately observe will choose socially-efficient level. unable this choice, however, have incentive become overly opaque regulation limit improve welfare.