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This paper studies information disclosure when a financial supervisor cannot commit to reveal the situation of the banking sector truthfully. I present a bank-run model in which a regulator performs a stress test and chooses whether to disclose bank-specific information or only to release an aggregate report about the financial system. Information can be biased at a cost – the higher this cost, the more credible the regulator. If credibility is not too low, the disclosure policy is state-contingent and information manipulation is often effective, even though investors are aware of the regulator's incentives. If credibility is low enough, the regulator loses the ability to avoid systemic runs by manipulating aggregate information and must release bank-specific reports (truthful or not) in all states, in which case not all runs can be avoided. If misreporting bank-specific information is possible and supervisors lack credibility, some banks have to fail the stress test to generate confidence in those who do pass the test. The results have implications for institutional design. Ex ante, a social planner would choose an interior level of credibility.
