Through financial reporting, the management of banks and non-bank financial institutions provide their shareholders, potential investors and other stakeholders with the past results of the business being managed and supervised. These reports give more in-depth insight into the income statement, balance sheet and cashflow and therefore, help the users of these reports better understand and assess the financial performance of the business.
This would cast a pall of gloom over the market, with homeowners keeping houses off the market, not re-building, and trying to pay off mortgages faster, saving more, and spending less. The construction and retail sectors would suffer as a result. Under this scenario, the Reserve Bank might have to reconsider some further monetary policy stimulus.