Banking transparency refers to the good practices of financial institutions with clients and banking supervisors in terms of banking products and balance sheet.
In general, bank transparency is related to the codes of good practice that banks and other financial entities are required to implement.
Specifically, bank transparency measures the level of information given by the bank (to the supervisors and interested agents) about its economic and financial situation, and also refers to the good treatment and truthful information of the products and operations with its clients. .
These good practices are mandatory for the entities subject to the supervision and management of the bodies in charge of it, and entail the establishment of specific obligations in relation to contracts, products and procedures, reporting the conditions and regulating related criteria. with advertising and acting. This, so that all this does not suppose a loss or damage of the clients.
Also, from the other side, bank transparency is aimed at offering truthful, real and adjusted information on the situation of the entities. Thus, supervisory institutions can take action and anticipate certain circumstances that could lead to systemic problems that need help.
Problems of bank transparency
At the beginning of the 21st century there have been numerous cases of massive deception and fraud in the information and documentation of a large part of the entities around the planet, the result of competition and low profitability, or of investments in dilapidated sectors.
For example, massive offers of complex and high-risk products have been given to people who do not have an advanced financial profile to know what they were, and who involved breaking the rules in terms of information and truthfulness.
Along with these circumstances, there have been accounting fraud and adulterated information in the accounting and financial statements of the banks in order to avoid their rescue and liquidation, or simply to ward off a banking crisis. However, the opposite happened, in an escalation that resulted in the rescue and disappearance of numerous entities.Bank transaction
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