In 1996 when the Bangladesh capital market was passing through a big bubble, one vernacular daily published a report with an eight-column headline: This is the time to buy shares!! The report was mostly based on opinions, not on market research, so raised the eyebrows of many market analysts who know its immediate impact on markets. Thousands of innocent small investors were lured into purchasing shares of companies recommended by a reporter who lacked expertise in financial matters and had no analytical understanding of stock markets. A significant portion of these small investors risked their entire savings in the unpredictable stock market, driven by the allure of quick profits, as they were influenced by self-proclaimed market analysts who congregated outside the Dhaka Stock Exchange.

A study shows that approximately 80% of investors experienced financial losses in the stock market in 1996 as the Dhaka Stock Exchange (DSE) index nose-dived suddenly to its lowest level at 462 points in May from its high of around 3,600 points in November. Small investors who lost money in bubble stock markets are now passing measurable lives as they sold their properties or took loans from banks putting their homes and land as mortgages. However, some newspapers mostly English dailies took prudent roles warning the investors about the probable shocks. But most of these investors ignored the reports rather than followed rumours and gossip, leading them to face pitfalls.

The banking and financial markets are more susceptible to being influenced by negative press and consumer-generated scandals rather than objective facts and fundamentals. In 2013, for example, when a "viral" fake tweet, originating from a compromised Associated Press account, falsely claimed that explosions at the White House had injured Barack Obama. This single tweet had a devastating impact, leading to a staggering loss of over $130 billion in the value of the American Stock Market Index (such as the S&P 500).

In August, The Basis Point, a web-based news portal on finance and the market wrote this headline - Will there be a First Republic Bank run? Here are risk factors and strengths. - and we got comments like 'bold', 'be careful', and 'headline was less than entirely responsible'. The 'be careful' comment came from a bank executive connected at the highest levels who was referring to some technical in the piece. Therefore, the responsibility for any misinformation cannot solely be attributed to the reporter. Before the financial crisis, in 2007, a Reuters Institute study found that banks themselves were the initiators of 62% of coverage. By 2013, however, this figure had fallen to 47%.

Globally, fake news is now a more significant issue than ever due to the expansion of alternative news outlets and the use of social media. This development has created many concerns, particularly in the financial markets where the negative report has a big impact on small investors. A UN survey claims that about forty-two per cent of people use social media and that sixty-three per cent of the world's population currently accesses the internet. The alarming findings fact is that approximately six times longer to reach 1500 individuals through social media than it did to spread incorrect information it took the truth, according to MIT research. The study also reveals that false information was 70% more likely to spread than actual news due to unholy competition among media and technological advancement. Therefore, the issue of the media's role in the financial sector reform process and the issues of press freedom have sparked discussions in the global financial journalism landscape.

Bangladesh is not out of its purview. A study conducted in 2020 by an independent journalist and researcher M Abul Kalam Azad found that social media are the sources of 82% of rumours. In his study titled 'Social Media Rumours in Bangladesh', it was found that the mainstream media is the source of 18% of the fake news. It was also found that 34% of fake news is political while 16% of fake news is related to health and education, 11% is related to crime and 11% is related to religion. There are two types of information related to fake news and rumours - misinformation and disinformation, Azad said while presenting his paper in an open discussion.

Business and bank executives, as well as regulators, have recognized the advantages and disadvantages of media coverage. On one hand, it can raise awareness about a firm and its products, boost sales, generate investor interest, and enhance the reputation of executives and company brands. On the other hand, media coverage can also disseminate harmful information that tarnishes reputations, lowers sales, and leads to declining share prices. So, the question of the misuse of freedom of the press has come to the fore. The right to free speech does not give us the right to shout fire in a crowded cinema; there was a fire risk, and we might have lit the spark by shouting about it. Freedom of speech cannot be linked to defamation or the abuse of any group or individual. Bangladesh has taken significant steps in implementing reform measures within its banking and financial sector with the aim to bolster investor confidence, mitigate financial risks, and propel sustainable economic growth. The government's commitment to fostering a resilient and inclusive financial sector is crucial in promoting stability, attracting investments, and advancing financial well-being for all stakeholders. Here the press and media should play a vital role in shaping and facilitating financial reforms acting as a watchdog, providing critical analysis, investigative reporting, and public awareness on issues related to the financial sector.

But there is a discrepancy between the ideal active watchdog role journalist picture for themselves and their actual role enactment. So, the role of press freedom comes to the fore when investigative journalists are threatened by corporations, organized crime groups, and governments. Many study reports show that press freedom has a significant positive effect both on the frequency and severity of observed operational losses.

As technological innovations have created an ever-growing media net and where the lines between users and consumers become increasingly blurred, questions of media accountability and journalists' ability continue to remain an important source of discussion. Many believe the media had done very little while others argued that the secretive nature of the financial institution made it possible for the media to have access to adequate information that it needed to adequately perform.

There seems to be an unclear and undivided opinion on the role the media played in the global financial crisis and reforms. So, how the media covers the banking and financial sector has been the subject of great debate. Simultaneously, the accountability and duties of bankers, experts, and regulators in shaping a fair financial society should come under scrutiny.

Many bankers and regulators say that most of the banking-related information that the newspapers primarily provide is fact-based, as opposed to opinion-based and the stories are usually generated by the journalists themselves. From media professionals, the blame is not untrue to some extent as the 'media' are not a homogeneous block. They are made up of journalists and editors, with very different educational backgrounds, personal views, and ways of working. Therefore, the question of knowledge deficit has come into discussion as it affected the ability of the media to produce stories on the sector with such accuracy and competence that most suits journalistic tenets. So, how the media covers the banking and financial sector has been the subject of great debate. Simultaneously, the accountability and duties of bankers, experts, and regulators in shaping a fair financial society should come under scrutiny.

The reality is that economic pressure has impaired the quality of financial reporting. Tremendous declines in advertisement and subscriber revenues in the past came along with the dismissal of many journalists and editors, the closing of newsrooms, mergers of news outlets, and a move toward cheaper, online news distribution channels. While these developments can be found across the entire news industry, it appears that financial journalism in the United States has particularly been suffering from these changes.

Over the years, the country's banking and financial sector grabbed news headlines due to wrongdoings, credit scams and weak regulatory actions in the banking sector while the stock market witnessed inadequate media intervention as watchdog boy during crisis times. The lack of action from regulators in response to that misleading reporting has exposed a knowledge gap that exists both within the media and among regulators. This has raised questions about the roles of not only bankers and regulators but also the responsibility of editors of newspapers and media.

This paper aims to address the challenges of balancing synergies or contradictions between press and media initiatives in financial and banking sector reforms. The objective is to gain a deeper understanding of how bankers and editors can effectively manage social conflicts and improve financial reporting in Bangladesh to prevent crises.

Lessons From Global Crises

The big concern is that the bad news about the economy can often boost public spending and corporate investment, rather than decrease it. Since the crisis hit, the share of negative coverage has remained higher than pre-crisis levels. During global financial crises particularly in Europe and even developing countries like Ghana the role of media was inadequate and in most cases deceptive, according to empirical studies of reputed research organisations.

During the global financial crisis, a study shows that the share of negative coverage remained higher than pre-crisis levels. The coverage failed to properly inform and prepare the public, businesses, industrial sectors, and governments. Even before the crises, business figures often criticised news coverage as highly negative and journalism critics complained coverage was uncritical and ill-informed. Solid evidence supporting either of the claims was limited, however, and many of the claims were based on anecdotal evidence, personal experiences, and self-interest.

The above observations are backed by some study findings on the roles of media during the recent global financial crisis. A collaborative study conducted by the Corvinus University of Budapest and the Stockholm School of Economics of Latvia reveals that the media failed to provide adequate warnings regarding the international financial crisis of 2008. During periods of financial turmoil, according to the study, the behaviour of depositors was influenced by the economic information they receive, which is predominantly shaped by the media, especially among retail depositors. Consequently, the study indicates that the severity and efficiency of bank runs during financial crises depended on the volume of negative news presented by the media.

According to Robert Bailhache, Director of Communications at Direct Line Group who was the head of HSBC Holdings press operations and MD of Financial Services at Financial Dynamics during the financial crisis most journalism coverage is very narrow. "It is interpreted through the lens of asset class, or through one stream of economic data. From a crisis management point of view, it certainly makes it easier to handle. The coverage of the Asian crisis was more thoughtful than the coverage of the European and US crises", he said.

Skills Take Centre Stage

With in-depth reporting with expert analysis, the media can play an important role in corporate governance as a passive monitor while press freedom positively affects the frequency and severity of public operational losses. However, it depends on the knowledge of journalists about complex financial markets how they operate and their understanding of the sector. Knowledge deficit affects the ability of the media to produce stories on banking and finance with such accuracy and competence that most suit journalistic ethics and principles.

A study on Ghana's financial sector during the crisis period shows that media face challenges in reporting financial issues comprehensively because most banking and microfinance institutions have generally not been proactively forthcoming with information on their finances and operations unless compelled. This situation affects the capacity of media and journalists to report on the sector with the right information. Media engagements with the financial sector, in the form of reporting and coverage, were critical to realizing the regulatory objectives of transparency and accountability.

Critical thinking and analytical skills are crucial for journalists to assess the implications of financial news and identify potential risks or opportunities. Unfortunately, according to the study, the media's role and attempts at reporting on the sector were gravely challenged by the inadequacy of information volunteered or made public by the sector. It is this knowledge deficit that has affected the ability of the media to produce stories on the sector with such accuracy and competence that most suits journalistic tenets.

Skills are essential for journalists reporting on banking and financial markets due to the complex and specialized nature of these subjects. Corporate crises cannot be analysed as static facts: they are interpretative events where individuals involved seek to make sense of a new reality. Most stakeholders only play a minor role in setting the media agenda about banking through statements and PR work, and journalists appear to be generally willing to report about topics referencing facts and using reasonably neutral tones.

Financial stories are more complex and specialist than ever before. Most see financial journalism's weakness as cock up rather than conspiracy as questions have been raised about the complex ethical conflicts and more subtle conflicts of interest behind the 'bubble' journalism. Knowledge of the sector by journalists and how it operates will undoubtedly afford them a greater understanding of the sector. So, journalists need a solid understanding of financial concepts, terminology, and market dynamics to accurately interpret and convey information to their audience.

Financial journalists are criticized for superficiality and for a failure to conduct investigations… and for inappropriate news values… They are criticized for being insufficiently sceptical. The main reason is the increasing complexity of financial objects beyond the training, education and skills of most journalists. This complexity makes it difficult for financial journalists to contribute in a meaningful way to corporate governance.

Access to Information and Press Freedom

Proficiency in financial analysis and interpretation of financial statements enables journalists to provide insightful analysis and meaningful context to their reporting. Additionally, journalists need accurate and up-to-date information from various sources, including banks, firms, research organisations regulatory bodies and industry publications. But the task is not so easy as most crucial data and information are kept hidden from reporters when investigative journalists are threatened by corporations, organized crime groups, and governments.

According to the worldwide barometer of Reporters Without Borders, 47 journalists and 4 media assistants were killed in 2020 while 384 journalists and 12 media assistants were imprisoned. In Bangladesh, Sagar Sarowar and her wife Meherun Runi, a financial journalist were stabbed to death in their home in front of their 5-year-old son on 12 February 2012. It is widely believed that the couple were targeted because of their investigative reporting on corruption in Bangladesh's energy sector which they were about to publish.

Freedom of the press is crucial to enhance the roles of media in financial and banking sector reforms. Studies on developing markets have consistently shown that press freedom plays a crucial role in enhancing financial transparency and accountability by positively influencing the frequency and severity of public operational losses. Media restrictions can further exacerbate the dilution of financial literacy during times of financial crises, undermining market discipline. This is evidenced in many studies. The presence of some regulations like the Digital Security Acts of Bangladesh poses significant challenges to financial journalism, hindering its potential to promote necessary financial reforms for a fair, efficient, and sound financial market.

For example, a group of American researchers analysed 8,144 loss events from 132 countries between 2008 and 2019 and found that press freedom significantly positively affects the frequency and severity of the observed operational losses. The countries with tightly controlled media, hidden operational risks are tremendous. Controlling for factors related to governance, living standards, business cycles, and firm size, the study found that an improvement of one standard deviation in press freedom yields around 43% more and 71% higher public losses.

However, the impact of media freedom becomes a subject of debate, as some research papers indicate that higher media freedom during crisis time can blur the information environment, potentially influencing depositors' decision-making. In this context, the government can consider implementing temporary limitations on the dissemination of negative information in the media during periods of economic downturn. Striking the right balance between press freedom and regulatory measures is a complex task, but it is essential to ensure financial stability and maintain public confidence in the banking sector.

The media should always lead with what bleeds, but covering a crisis should be more delicate. The right to free speech does not give us the right to shout fire in a crowded cinema; there was a fire risk, and we might have lit the spark by shouting about it. Freedom of speech cannot be linked to defamation or the abuse of any group or individual. The boundary must be clearly defined. Social media will be harder to govern in the future if we don't make good use of it now.

The sources from which journalists receive their information are often interested parties, who grant information on the condition it is presented as they deem fit. All of these criticisms, however, are of course based on the assumption that financial journalists should play an independent, 'watchdog' role. In this regard, the responsibility of media organizations and the cooperation of financial institutions are equal and collaboration between journalists and financial experts is crucial.

Public relations officials need to realise that a company is likely to receive the fairest, least negative coverage if it presents information clearly and accurately: in all countries surveyed, reporting focused on present facts or events was more positive in tone than reporting based on speculation. It does appear that journalists have not played a watchdog role. There has been instead a tendency to report positively on banks when they are undergoing periods of rapid growth, without asking too many questions on whether this growth is sustainable.

Bangladesh: Where Do We Stand?

In Bangladesh, there is a substantial amount of goodwill between the financial industry and journalists. The media are not actively looking for negative stories in the financial sector and are willing to report on business news in a positive manner and with a neutral tone where possible. However, banks and regulatory bodies are shy to disclose information to journalists. Some bankers say they fear misinterpretations of data while regulators fear distortions of facts and comments driven by knowledge deficits of the journalists.

There seem to be unclear and undivided opinions that need more discussion. Financial journalism has already taken root in Bangladesh over the last decade thanks to cooperation between financial experts and journalists. But the coverage remains confined to only general reporting like incidents of wrongdoings, loan scams, award-winning events etc. Most bankers and financial analysts of banks and FIs are restricted by their owners to disclose facts necessary for their customers and investors while public relations officers are assigned to publish only their development news.

In the 90's when the government undertook the Financial Sector Reform Programme as prescribed by the World Bank, financial journalism in Bangladesh consisted of little more than the publication of prices of commodities or other goods. As more private banks entered and trade and commerce expanded over the following years, so did the role and content of financial journalism. However, it began to mature in 1993 with the emergence of The Financial Express as the country's first financial daily. The growth of financial journalism gained momentum in 1994 when Bangladesh Television started airing programs like "Taka ana Kori." These developments had a significant impact on the industry.

In terms of skills, financial journalism gained maturity in 1997 when the banking sector became the main driving force of the economy with diverse products and services. The Financial Express played a significant role in promoting banking innovations and enhancing transparency and fostering digitalisation. For example, the daily published two series of reports on foreign exchange and secondary bond market development which speed up foreign exchange operations in real-time. In 2000, The Bangladesh Express then a specialised fortnightly magazine for the first time conducted a Credit Rating of 22 private commercial banks utilizing the CAMEL methodology which received recognition from Dr. Farash Uddin Ahmed, the then Governor of Bangladesh Bank. Notably, it was a financial journalist who introduced a web-based call money trading platform in 2009, subsequently connecting 52 banks in 2014 with the assistance of Bangladesh Bank. Between 2016 and 2022, The Bangladesh Express organized Annual Print Media Dialogues, featuring CEOs of banks and fintech firms, through special publications.

In 2010, when a conflict over the business model for mobile financial services (MFS) emerged newspapers such as Daily Star, Daily Observer, The Financial Express, and The Bangladesh Express played vital roles. Bangladesh Bank ultimately adopted a bank-led model which has been embraced by numerous other economies worldwide, serving as a shining example of how the media in Bangladesh fulfils its watchdog role in the country's banking and financial sector reforms. More than 5 business dailies are now involved in business and financial journalism and all TV channels are broadcasting market news regularly with expert analysis to foster reforms in the country's banking and financial sector under a conducive environment of press freedom.

In recent years, banks in Bangladesh have continued to grab news headlines primarily due to instances of misconduct, large-scale loan scams, and ineffective regulatory measures. Other key factors include high levels of related-party lending, increasing levels of non-performing loans (NPLs), lenient regulations regarding NPL repayment that allow defaulters to extend payment schedules and the practice of window-dressing accounts through loan evergreening. Consequently, investors who have invested in bank stocks are not receiving satisfactory returns, as these banks are being exploited as tools of economic oppression, with directors benefiting at the expense of genuine and small investors.

However, it must be acknowledged that banks, FIs, MFS and other market players tend to conceal sensational information and selectively provide positive information through their public relations (PR) officials. This practice can lead to the misuse of press freedom.

The Bottom Lines

It is crucial to implement the ongoing financial sector reform programmes. Journalism should not remain silent. With in-depth reporting, the media should play more role as a passive monitor, while the government ensures press freedom and bankers and regulators should support them with adequate information.

Media should lead with what bleeds, but covering a crisis requires delicacy. Journalists should enhance their understanding of financial reporting and recognize that freedom of speech does not permit them to create panic or spread false information. Media organizations could introduce comprehensive financial journalism courses to enhance the skills of their reporters. Here, collaboration between bankers and editors is vital in achieving tangible results.