Towards Transparency in Finance and Governance

Abstract

The study of transparency is increasingly a more topical, broadly relevant, but also more under-researched enterprise. The Asian financial crisis has highlighted not only the welfare consequences of financial sector transparency, sparking a series of yet unresolved debates, but has also linked this relatively narrow problem to the broader context of transparency in governance. Its significance has broadened geographically as well as across different sectors. It has been observed that curtailment of transparency, often on scanty pretexts, is commonplace even in the highly developed countries. This suggests a broad and possibly radical reform agenda. Departing from the urgency of these observations, this paper reviews the existing literature on transparency in finance and governance, indicates remaining knowledge gaps, and offers some hypothesis on the mutual significance of the two issues.

Keywords: financial liberalization, transparency, corruption, governance, banking crisis, asymmetric information, local investors, shocks, bad loans, emerging markets

JEL Classification: E6, F02, F30, F4, G00, G14, G15, G18, G38, H0