But in a crisis, market participants tend to believe the worst. To contain the crisis and restore confidence, it is necessary both for managers and public authorities to be able to deliver the bad news and be believed by the markets.
If there is no tradition of accurate, high quality information that can be relied on, market participants and bank depositors are likely to believe that things are substantially worse than they really are and proceed to prove it by their actions. A culture of transparency and timely, accurate information can serve as an economic stabilizer in both directions.