After all, if governments are going to become extensively involved in directing where banks should and should not lend, it is not unreasonable if the banks and their creditors assume that governments will ‘see them right’ if things go wrong.
Disclosure thus brings into play a check mechanism inherent in financial markets (hereafter referred to as the market check mechanism) that disciplines management of financial institutions, and thereby helps to enhance the efficiency and transparency of the markets and to stabilize the financial system.