Toward Transparency : New Approaches and Their Application to Financial Markets

The Asian financial crisis in the late 1990s not only highlighted the welfare consequences of transparency in the financial sector but also linked this relatively narrow problem to the broader context of transparency in governance. It has been obse...

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Bibliographic Details
Main Authors:	Vishwanath, Tara, Kaufmann, Daniel
Format:	Journal Article
Language:	English en_US
Published:	Washington, DC: World Bank 2014
Subjects:	ACCESS TO INFORMATION ACCOUNTABILITY ACCOUNTING ACCOUNTING PRACTICES ACCOUNTING STANDARDS ACCOUNTING SYSTEMS ADVERSE SELECTION ARBITRAGE AUDITING AUDITORS AUDITS BAILOUT BAILOUTS BALANCE SHEET BANK ACTIVITIES BANK FAILURE BANK FAILURES BANK FOR INTERNATIONAL SETTLEMENTS BANK LOAN BANK LOAN GUARANTEES BANK OF ENGLAND BANK OFFICERS BANK PANICS BANK POLICIES BANK RATINGS BANK RUNS BANK SOLVENCY BANK TRANSPARENCY BANKING CRISES BANKING CRISIS BANKING PRACTICES BANKING SUPERVISION BANKING SYSTEMS BANKRUPTCY BASLE ACCORD BENEFICIARIES BONDS BORROWING CAPITAL ADEQUACY CAPITAL CONTROLS CAPITAL MARKETS CAPITAL REQUIREMENTS CENTRAL BANK CENTRAL BANKING CENTRAL BANKS CONFIDENTIALITY CONNECTED LENDING CONTAGION CONTINGENT LIABILITIES CORPORATE DISCLOSURE CREDIBILITY CREDIT AGENCIES CREDIT APPROVAL CREDIT EXPANSION CREDIT RATIONING CREDIT-RATING AGENCIES CREDITORS CREDITWORTHINESS DATA QUALITY DEGREE OF RISK DEPOSIT DEPOSIT INSURANCE DEPOSIT RATES DEPOSITORS DEPOSITS DERIVATIVE DERIVATIVE INSTRUMENTS DERIVATIVES DEVALUATION DEVELOPING COUNTRIES DISCLOSURE OF INFORMATION DISCLOSURE REQUIREMENTS DISCLOSURE STANDARDS DISSEMINATION OF INFORMATION DIVIDENDS DOMESTIC BANKS ECONOMIC CONDITIONS ECONOMIC COSTS ECONOMIC CRISES ECONOMIC EFFICIENCY ECONOMIC GROWTH ECONOMIC STABILITY EMERGING ECONOMIES ENFORCEMENT MECHANISMS EXTERNALITIES FEDERAL RESERVE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INFORMATION FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL INTEGRATION FINANCIAL LIBERALIZATION FINANCIAL MARKET FINANCIAL MARKET INFORMATION FINANCIAL MARKETS FINANCIAL REFORM FINANCIAL RISK FINANCIAL SAFETY NETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STUDIES FINANCIAL SYSTEM FINANCIAL SYSTEMS FINANCIAL TRANSACTIONS FISCAL POLICY FLOW OF INFORMATION FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY DEBT FOREIGN INVESTORS FULL DISCLOSURE GLOBAL FINANCIAL INTEGRATION GLOBAL FINANCIAL SYSTEM GLOBALIZATION GOOD GOVERNANCE GOVERNMENT POLICIES GOVERNMENT POLICY GOVERNMENT REGULATION HEDGE FUNDS INDUSTRIAL COUNTRIES INFLATION INFORMATION ASYMMETRIES INFORMATION DISCLOSURE INFORMATION SHARING INFORMATION SYSTEMS INNOVATION INNOVATIVE FINANCING INSTITUTIONAL DEVELOPMENT INSTITUTIONAL INFRASTRUCTURE INSTITUTIONAL INVESTORS INTEREST RATES INTERNATIONAL BANK INTERNATIONAL BANKING INTERNATIONAL ECONOMICS INTERNATIONAL MARKET INTERNATIONAL MARKETS INTERNATIONAL SETTLEMENTS INVESTMENT ACTIVITY LACK OF TRANSPARENCY LAW ENFORCEMENT LAWS LEGAL ENVIRONMENTS LENDERS LEVY LIBERALIZATION OF FINANCIAL MARKETS LIMITED LIABILITY LIQUIDITY LIQUIDITY CRISES LIQUIDITY POSITION LOAN LOAN CLASSIFICATION LOAN CONTRACTS LOAN GUARANTEES LOCAL CURRENCY MACROECONOMIC POLICY MANDATES MARGINAL COST MARKET DISCIPLINE MARKET ENVIRONMENT MARKET EXPECTATIONS MARKET INFORMATION MARKET STABILITY MATURITY MONETARY FUND MONETARY POLICY MORAL HAZARD NATIONAL SECURITY NONPERFORMING LOANS OUTPUT PENALTIES PORTFOLIOS PRICE VOLATILITY PRIVACY PRIVATE CREDIT PROBLEM LOANS PROFITABILITY PROPERTY RIGHTS PUBLIC POLICY PUBLIC SERVICES REGULATORY ENVIRONMENT REGULATORY ENVIRONMENTS REGULATORY FORBEARANCE REGULATORY SYSTEM RENTS REPUTATION RESERVES RESOURCE ALLOCATION RETURNS RISK PROFILES RULE OF LAW SAFETY SAFETY NET SAFETY NETS SAVINGS SCANDALS SELF-REGULATION SHARE PRICE SHAREHOLDERS SOCIAL VALUE SOLVENCY STOCK EXCHANGE STOCK MARKET STOCK MARKET VOLATILITY STOCK RETURN TAX TAX SYSTEMS TECHNICAL ASSISTANCE TRANSACTION TRANSACTION COSTS TRANSPARENCY UNEMPLOYMENT VALUATION VALUE OF ASSETS WARRANTS WEAK ENFORCEMENT WORLD FINANCIAL MARKETS
Online Access:	http://documents.worldbank.org/curated/en/2001/03/17580032/toward-transparency-new-approaches-application-financial-markets http://hdl.handle.net/10986/17128

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Summary:	The Asian financial crisis in the late 1990s not only highlighted the welfare consequences of transparency in the financial sector but also linked this relatively narrow problem to the broader context of transparency in governance. It has been observed that objections to transparency, often on flimsy pretexts, are common even in industrialized countries. This article argues that transparency is indispensable to the financial sector and describes its desirable characteristics: access, timeliness, relevance, and quality. The authors emphasize the need to weigh the costs and benefits of a more transparent regulatory policy, and they explore the connection between information imperfections, macroeconomic policy, and questions of risk. The article argues for developing institutional infrastructure, standards, and accounting practices that promote transparency, implementing incentives for disclosure and establishing regulations to minimize the perverse incentives generated by safety net arrangements, such as deposit insurance. Because institutional development is gradual, the authors contend that relatively simple regulations, such as limits on credit expansion, may be the most reasonable option for developing countries. They show that transparency has absolute limits because of the lack of adequate enforcement and argue that adequate enforcement may be predicated on broader reforms in the public sector.

Toward Transparency : New Approaches and Their Application to Financial Markets

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