Bocconi Graduate Test

Practice session

Passage: In response to rapid advancements in financial technology, the European Union implemented new regulatory guidelines requiring fintech companies to disclose the algorithmic models used in automated risk assessment. Industry representatives argue that these mandatory disclosures compromise proprietary intellectual property and disincentivize R&D investment. However, financial regulators maintain that algorithmic transparency is essential for mitigating systemic credit risks and preventing discriminatory lending practices. According to the passage, what is the primary rationale provided by financial regulators for enforcing algorithmic transparency?

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