Showing papers on "Financial sector development published in 1995"
TL;DR: The authors presented a model where there may be conflict between macroeconomic stabilization and monetary and other financial targets, and showed that the indicator properties of some financial variables may be rendered unstable by the liberalization process, while other carefully selected financial aggregates may contain information about economic activity that is useful to policy makers during stabilization.
Abstract: Deregulation of the financial system often proceeds in tandem with macroeconomic stabilization centered on monetary and other financial targets. This paper presents a model where there may be conflict between these processes. The indicator properties of some financial variables may be rendered unstable by the liberalization process. However, other, carefully selected financial aggregates may contain information about economic activity that is useful to policy makers during stabilization. Data from a group of selected African and Asian countries is examined. These are broadly consistent with the predictions of the model, while highlighting the importance of macroeconomic and financial stability for the success of financial reforms.
43 citations
Book•
01 Jan 1995
TL;DR: Based on a study of several member countries of the Asian Development Bank, the authors assesses the extent and pace of financial sector deregulation in developing Asia and examines the institutional framework necessary for the development of the financial sector, and its importance in facilitating the transfer of resources from savers to investors.
Abstract: Based on a study of several member countries of the Asian Development Bank, Financial Sector Development in Asia assesses the extent and pace of financial sector deregulation in developing Asia. It examines the institutional framework necessary for the development of the financial sector, and its importance in facilitating the transfer of resources from savers to investors.
16 citations
01 Jan 1995
TL;DR: Griffith-Jones et al. as mentioned in this paper introduced a framework for non-banking financial flows in the Czech Republic and discussed the link between non-banking financial sector and the link to foreign investment.
Abstract: PART 1: INTRODUCTION AND NON-BANKING FINANCIAL FLOWS - Introductory Framework S.Griffith-Jones - Non-Banking Financial Sector and the Link to Foreign Investment Z.Drabek - PART 2: CASE STUDIES - Key Issues in Czechoslovak Banking: a Central Banker's Perspective M.Kerous - Capital Accumulation for Long-Term Economic Growth in the Czech Republic J.Klacek - Problems of Financing Small and Medium-Sized Enterprises in the Czech Republic O.Dedek - Development of the Financial Sector in Hungary during the Transition Period R.Nyers & G.R.Lutz - Financial Sector Development and Macroeconomic Policy in Poland in 1990-93 T.Lamacz - PART 3: LESSONS FROM DEVELOPING COUNTRIES - Financial Liberalization, Growth and Adjustment: Some Lessons from Developing Countries R.Vos - PART 4: CONCLUSIONS AND POLICY IMPLICATIONS - Conclusions S.Griffith-Jones & E.V.K.FitzGerald
9 citations
TL;DR: The authors argue that heavy-handed regulation and onerous implicit taxation of financial intermediaries in Latin America in the 1980s was softened by governments' assumption of responsibility for bank failures, which in turn induced governments to avoid dealing with bank distress with disastrous subsequent consequences.
Abstract: This commentary argues that heavy-handed regulation and onerous implicit taxation of financial intermediaries in Latin America in the 1980s was softened by governments' assumption of responsibility for bank failures. This in turn induced governments to avoid dealing with bank distress, with disastrous subsequent consequences. In effect, mismanaged bank regulations were propped up by mismanaged bank exit procedures. The disincentives induced by such financial policies on bankers, depositors, creditors and regulators were pervasive. Illustrations are drawn from the experiences of four Latin American countries (Argentina, Bolivia, Nicaragua, Venezuela) in the 1980s.
8 citations
Posted Content•
TL;DR: Caprio and Vittas as mentioned in this paper argue that a relatively unregulated banking system may be a wise option for emerging markets, if high liability limits can be enforced and if private institutions have strong private incentives to create their own clearing system, to benefit both banks and the public.
Abstract: Scotland's nineteenth-century experience with free banking offers lessons to inform contemporary policymakers. A relatively unregulated banking system may be a wise option for emerging markets, if high liability limits can be enforced. The notion of free banking is at least as difficult to define as the notion of central banking. Instead, Kroszner focuses on a relatively unregulated banking system that operated in Scotland in the eighteenth and nineteenth centuries (Sweden adopted a similar system). Kroszner argues that a relatively unregulated system is a wise option for emerging markets today, which exhibit many features of the eighteenth and nineteenth century Scottish economy. In terms of private institutions and monitoring (typically thought to be a central bank responsibility: A private clearing system is feasible. So are private development and enforcement of capital and liquidity standards. Financial institutions have strong private incentives to create their own clearing system, to benefit both banks and the public. In creating such a system, the institutions develop standards for capital, liquidity, and prudential management that will become requirements for membership in the system. Modern examples: The Chicago Board of Trade and Chicago Mercantile Exchange. Competition is generally compatible with prudence and coordination (although the excessive note issue by the Ayr Bank demonstrates that the system did not eliminate all rogues). The Ayr Bank is the only major exception to the smooth operation of Scotland's private clearing and monitoring system in more than a century, and the system helped to contain the problems from this bank's collapse, fulfilling a role typically considered to belong to a central bank. There are private alternatives to deposit insurance or to a central bank to maintain confidence in and foster the stability of the financial system. Sophisticated note and deposit contracts are feasible. Free entry is important to encourage innovation. Branching and portfolio diversification can substitute for deposit insurance, to stabilize the banking system. So can extended liability (beyond simple limited liability of the shareholders), to give depositors and note holders some assurance that a bank could withstand a negative shock. Another alternative to deposit insurance is theoption clause or other contingent or equity-like contracts, which can solve or minimize the problem of bank runs. Is any role left for a central bank as lender of last resort? An explicit central bank may not be needed, but rather mechanisms to provide added liquidity, perhaps through the clearing system, in times of trouble. This paper - a joint product of the Finance and Private Sector Development Division, Policy Research Department, and the Financial Sector Development Department - was presented at a Bank seminar, Financial History: Lessons of the Past for Reformers of the Present, and is a chapter in a forthcoming volume, Reforming Finance: Some Lessons from History, edited by Gerard Caprio, Jr. and Dimitri Vittas.
2 citations
01 Jan 1995
TL;DR: In this article, the transition process from a socialist to a market economy in Poland is analysed in the three following areas: macroeconomic stabilisation, institutional changes, and microeconomic restructuring of production capacity.
Abstract: This chapter consists of four sections. Following this Introduction section II shows the transition process from a socialist to market economy in Poland, which is analysed as having proceeded in the three following areas:
macroeconomic stabilisation,
institutional changes,
microeconomic restructuring of production capacity.
1 citations
Posted Content•
TL;DR: In the case of Moldova, the World Bank provided a pre-export guarantee facility for the local banking system as discussed by the authors, but the bank had neither the capital base nor the techniproviso that the facility should not require the government to assume commercial risks.
Abstract: Onno Rahl and Moldovan firms wanting to export face severe Moldova asked the World Bank to help design Alfred Watkins financing constraints. The local banking sysa pre-export guarantee facility, but with the tem has neither the capital base nor the techniproviso that the facility should not require the cal capacity to finance their working capital government to assume commercial risks. Unrequirements. And export credit agencies eider this facility, which became operational on ther are not willing to provide cover or, if they October 30, 1995, the Moldovan government are, require a full government counterguaranguarantees financiers against political risk, and tee covering both commercial and political risks. the World Bank provides a backstop guaranThus, to enable viable local firms to attract pritee of the government's claim payment obligavate working capital, the government of tions. A similar approach could be used in other transition economies, where firms face much the same constraints.
1 citations
01 Jan 1995
TL;DR: The development of the financial sector in the reforming economies of Central and Eastern Europe face important short-term and long-term challenges as discussed by the authors, and the development of financial sector is one of the most important issues.
Abstract: The development of the financial sector in the reforming economies of Central and Eastern Europe face important short-term and long-term challenges.