alleryStart learning →Which incentive can make reported NPL figures unreliable?
APressure to overstate deposits
BRules rewarding provisioning
CPublic demand for disclosure
DMotive to understate NPLs
Answer & Solution
Correct answer: D. Motive to understate NPLs
Banks fear reputational damage and dearer market funding, so they may be tempted to report fewer bad loans than they hold.
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