With greater disclosure requirement, more financial institutions will be subject to the risk of public disfavor. Ultimately the "discipline of the market"
will be more completely unleashed to help ensure prudent management and to control risk taking.

Question

Quizplus · Accepted Answer

Greater disclosure requirements increase transparency, allowing the market and the public to better assess the risk management and operational practices of financial institutions. This scrutiny can lead to a natural market discipline as institutions aim to avoid public disfavor by managing their operations more prudently and controlling their risk-taking behaviors.

With Greater Disclosure Requirement, More Financial Institutions Will Be Subject