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Transparency important in market-based vs bank-based systems

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Why is transparency important in a market-based financial system? Why is it less important in a bank-based system?

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Solution Summary

The solution gives five reasons why transparency is so important in the market-based financial systems in the US economy followed by six reasons that discuss the banking sector in terms of regulation and transparency.

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I have no research to back up my opinions except for one short, but excellent article at http://mostlyeconomics.wordpress.com/2009/01/01/is-increasing-transparency-in-financial-markets-the-obvious-solution/

In financial markets:

1. When markets are too transparent, there would be no speculation about pricing. Without speculation, market traders could not start any rumors to cause volatility in the markets.

2. Without volatility, traders could not ...

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