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Getting the Dog to Bark: Disclosing Fiscal Risks from the Financial Sector

Getting the Dog to Bark: Disclosing Fiscal Risks from the Financial Sector Fiscal reporting is intended to warn of fiscal crises while there is still time to prevent them. The financial crisis thus seems to reveal a failure of fiscal reporting: Before the crisis, even government reports on fiscal risk typically did not mention banks as a possible source of fiscal problems. One reason for silence was that the risk arose partly from implicit guarantees, and governments may have feared that disclosure would increase moral hazard. The crisis cast doubt, however, on the effectiveness of silence in mitigating risks. This paper discusses how fiscal risks from the financial sector could be discussed in reports on fiscal risk, with a view to encouraging their mitigation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of International Commerce, Economics and Policy World Scientific Publishing Company

Getting the Dog to Bark: Disclosing Fiscal Risks from the Financial Sector

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Publisher
World Scientific Publishing Company
Copyright
Copyright ©
ISSN
1793-9933
eISSN
1793-9941
DOI
10.1142/S1793993316500101
Publisher site
See Article on Publisher Site

Abstract

Fiscal reporting is intended to warn of fiscal crises while there is still time to prevent them. The financial crisis thus seems to reveal a failure of fiscal reporting: Before the crisis, even government reports on fiscal risk typically did not mention banks as a possible source of fiscal problems. One reason for silence was that the risk arose partly from implicit guarantees, and governments may have feared that disclosure would increase moral hazard. The crisis cast doubt, however, on the effectiveness of silence in mitigating risks. This paper discusses how fiscal risks from the financial sector could be discussed in reports on fiscal risk, with a view to encouraging their mitigation.

Journal

Journal of International Commerce, Economics and PolicyWorld Scientific Publishing Company

Published: Jun 1, 2016

Keywords: Implicit guarantees contingent liabilities fiscal risks budget reports financial crisis

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