Financial derivatives, opacity, and crash risk: Evidence from large US banks

► We use banks' use of financial derivatives as a proxy for opacity. ► We test how financial derivatives affect banks' informational structure and future crash risk. ► We find the use of financial derivatives is positively related to stock price synchronicity. ► We find good governance mitigates the adverse impact of the use of financial derivatives. ► We find the use of interest rate derivatives is also positively related to future stock crash risk.