Showing papers on "Financial sector development published in 2005"

Access to Financial Services: A Review of the Issues and Public Policy Objectives

Abstract: This paper reviews the evidence on the importance of finance for economic well-being, provides data on the degree of usage of basic financial services by households and firms across a sample of countries, assesses the desirability of more universal access, and overviews the macro-economic, legal and regulatory obstacles to access using general evidence and case studies. Although access to finance can be very beneficial, the data show that universal usage is far from prevalent in many countries, especially developing countries. At the same time, universal access has generally not been a public policy objective and is surely not easily achievable in most countries. Countries can, however, undertake many actions to facilitate access to financial services, including through strengthening their institutional infrastructures, liberalizing and opening up their markets and facilitating greater competition, and encouraging innovative use of know -how and technology. Government attempts and interventions to directly broaden the provision of access to finance, however, are fraught with risks and costs, among others, the risk of missing the targeted groups. The paper concludes with possible global actions aimed at improving data on access and usage and areas of further analysis to help identify the constraints to broadening access.

Remittances, Financial Development, and Growth

Abstract: There has been little systematic empirical study on the relationship between remittances and growth. This paper attempts to examine this relationship. Using a newly constructed crosscountry of data series for remittances covering a large sample of developing countries, we relate the interaction between remittances and financial development and its impact on growth. We analyze how a country's capacity to use remittances and its effectiveness in doing so might be influenced by local financial sector conditions. Given the difficulty of borrowing in developing countries, we explore the hypothesis that remittances can substitute for a lack of financial development and hence promote growth. The empirical analysis shows that remittances can promote growth in less financially developed countries. This relationship controls for the endogeneity of remittances and financial development using a Generalized Method of Moments (GMM) approach, does not depend on the particular measure of financial sector development used, and is robust to a number of sensitivity tests.

Financial dependence, banking sector competition, and economic growth

Abstract: The relationships among competition in the financial sector, access of firms to external financing, and associated economic growth are ambiguous in theory. Moreover, measuring competition in the financial sector can be complex. In this paper the authors first estimate for 16 countries a measure of banking system competition based on industrial organization theory. They then relate this competition measure to growth of industries and find that greater competition in countries' banking systems allows financially dependent industries to grow faster. These results are robust under a variety of tests. Their results suggest that the degree of competition is an important aspect of financial sector functioning.

Financial Development, Financial Fragility, and Growth

Abstract: This paper studies the apparent contradictions between two strands of the literature on the effects of financial intermediation on economic activity. On the one hand, the empirical growth literature finds a positive effect of financial depth as measured by, for instance, private domestic credit and liquid liabilities. On the other hand, the banking and currency crisis literature finds that monetary aggregates, such as domestic credit, are among the best predictors of crises and their related economic downturns. This paper accounts for these contrasting effects based on the distinction between the short- and long-run effects of financial intermediation.

Financial Sector Development, Savings Mobilization and Poverty Reduction in Ghana

Abstract: Domestic resources serve as a vital engine of growth and poverty reduction. However, the effective mobilization of domestic resources depends on an efficient and well-developed financial market. The financial sector in Ghana has undergone change in terms of the number of institutions and services rendered, as a result of the financial sector liberalization programme pursued in the late 1980s, which led to interest rate liberalization and the entrance of new players. The outcome of this liberalization policy is reflected in Ghana’s financial development indicators: the M2/GDP ratio increased from 0.195 in 1996 to 0.32 in 2003. Similarly, over the same period the currency/M2 ratio declined from 0.41 to 0.29.

The mix of international banks' foreign claims: determinants and implications

Abstract: We analyze the cross-country determinants and financial stability implications of the mix of international banks’ foreign claims. We distinguish between local claims – extended by host country affiliates – and cross-border claims – booked outside the receiving country. Using data on Italian, Spanish, and US banks’ foreign claims, we find that the share of local claims is driven by restrictions on banking sector openness and by local scale economies/business opportunities. The impact of limits on property rights, entry requirements, start-up and informational costs is less robust. Finally, foreign claim volatility is lower in countries with a larger share of local claims.

Pensions in the Middle East and North Africa: Time for Change

Abstract: This is the first comprehensive assessment of pension systems in the Middle East and North Africa. While other regions-Central Asia, Eastern Europe, and Latin America, in particular-have been actively introducing reforms to their pension systems, Middle East and North African countries have lagged behind. This is explained, in part, by the common belief that, because demographics remain favorable-the countries are young and the labor force is expanding rapidly-financial problems are far in the future; as a result, pension reform does not have to be a priority in the broader policy agenda. However, the authors show that aging is not the only factor behind a financial crisis; the problem is the generosity of the current schemes. Moreover, badly designed benefit formulas and eligibility conditions introduce unnecessary economic distortions and make the systems vulnerable to adverse distributional transfers. The book does not present a general model that could solve the problems of all pension systems in MENA countries. Instead the authors focus on outlining a framework for guiding discussions on pension reform and making objective policy choices.

Macro Determinants of Total Factor Productivity in Pakistan

Abstract: By utilizing the conventional growth accounting framework, this study first estimates the Total Factor Productivity (TFP) in Pakistan and then establishes its macro determinants. Covering the sample from 1960 to 2003, the results confirm that macroeconomic stability, foreign direct investment, and financial sector development play an important role in the increase of TFP. Interestingly, education expenditures turn out to be insignificant.

Building Inclusive Financial Sectors: The Road to Growth and Poverty Reduction

Abstract: "The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector.... Together, we can and must build inclusive financial sectors that help people improve their lives." --UN Secretary General Kofi Annan, 29 December 2003, announcing 2005 as the International Year of Microcredit Inmost countries, financial services are available only to a small percentage of the population and the majority of bankable people in the world do not yet have access to them. (1) While financial sectors are expanding in terms of assets, these assets are concentrated in the hands of a few. Various constraints hamper or block the inclusion of different population groups that need access to financial services, notably women. Yet we know that access to well-functioning and efficient financial services can empower individuals economically and socially, allowing them to better integrate into a country's economy and actively contribute to its growth. Microfinance plays an important role in expanding that access. Critical to global development efforts, it has a vital role to play as part of the Millennium Development Goals, in which, in 2000, United Nations member states agreed to halve by 2015 the more than a billion people worldwide who live in extreme poverty and hunger. For microfinance to play this role fully, recognition must be given to the fact that financial services for the poor are an integral part of an inclusive financial sector. (2) The potential for domestic financial markets to act as drivers of growth and of poverty reduction over the long term has been demonstrated. There is an urgent need to place greater value and emphasis on access to financial services by poor households and enterprises. In this context, microfinance, often treated as a social measure distinct from the established financial sectors, needs to be taken out of a finance "ghetto," and become fully integrated into the mainstream financial sector. It is necessary to forge partnerships among domestic and international financial sector stakeholders to establish the necessary pre-conditions, tackle constraints, and assure a favorable policy environment to achieve an integrated financial sector. Microfinance is not an exercise in charity. As the microfinance industry matures, there are more opportunities for domestic and international finance actors to enter this market profitably while contributing to poverty reduction worldwide. Over time, the role of the private sector will also increase exponentially. As this occurs, the role of the public sector, including donor agencies, will change correspondingly. To address the issue of building inclusive financial sectors, this article first examines why financial inclusion is so important and why financial sectors are not inclusive today. The article lays out a vision of inclusive financial sector development and sketches out the complex set of constraints that must be addressed in order to foster domestic and international financial market development in favor of the poor. The complexity of the challenges is such that only a concerted effort by stakeholder groups will lead to the rapid increase of sustainable access to financial services that is so urgently needed. The article concludes by offering several strategies to build inclusive financial sectors, thereby contributing in a sustainable manner to meeting the Millennium Development Goals. THE CHALLENGE OF BUILDING INCLUSIVE FINANCIAL SECTORS The Inclusive Financial Sector as a Development Paradigm Financial services worldwide are available only to a small percentage of the population. While financial sectors are expanding in terms of assets, these assets are concentrated in the hands of a few. …

Financial Market Integration and Macroeconomic Volatility In the MENA Region: An Empirical Investigation

Abstract: Using panel data regression models this study examines empirically the impact of regional and international financial integration on macroeconomic volatility in the developing economies of the MENA region over the period 1980–2002. Our empirical results indicate that financial openness is associated with an increase in consumption volatility, contrary to the notions of improved international risk-sharing opportunities through financial integration. Our empirical findings emphasize the role of sound fiscal and monetary policies in driving macroeconomic volatility. In regard to structural reforms, the development of the domestic financial sector is critical, as a high degree of financial sector development is significantly associated with lower macroeconomic volatility. We argue that enhancing regional financial integration might constitute a venue to circumvent the vulnerability of the small open MENA economies to external shocks, and a mean to enhance consumption smoothing opportunities, as well as intern...

Services Policy Reform and Economic Growth in Transition Economies, 1990-2004

Abstract: Major changes have occurred in the structure of former centrally planned economies, including a sharp rise in the share of services in GDP, employment, and international transactions. However, large differences exist across transition economies with respect to services intensity and services policy reforms. The authors find that reforms in policies toward financial and infrastructure services, including telecommunications, power, and transport, are highly correlated with inward foreign direct investment. Controlling for regressors commonly used in the growth literature, they find that measures of services policy reform are statistically significant explanatory variables for the post-1990 economic performance of transition economies. These findings suggest services policies should be considered more generally in empirical analyses of economic growth

Measuring the Quality of Bank Regulation and Supervision with an Application to Transition Economies

Abstract: I. INTRODUCTION Financial sector development is closely associated with bank performance given that a major part of the financial sector is still accounted for by banks in a large part of the world. Banks play an essential role in resource allocation so long as depositors have confidence in the banking system's ability to pay the contracted return. Efficient transmission of resources by banks, however, can be threatened by adverse selection and moral hazard problems. Legal and institutional arrangements designed to achieve efficiency in resource allocation contribute to the soundness of the banking sector by reducing both the likelihood and the cost of such problems. Appropriately designed legal regulatory and supervisory frameworks and deposit insurance schemes constitute an essential part of such arrangements. Achieving a sound banking system via good regulation and supervision is not an end in itself, however, as it may also contribute to macroeconomic growth via improving efficiency in resource allocation. (1) This article's contribution is twofold. First, it develops a general framework to evaluate the legal environment for regulation and supervision of the banking sector. In doing that, it proposes an extensive list of criteria (a total of 98 criteria) to measure the quality of bank regulation and supervision (RS) based on banking laws. Second, using these criteria, we construct indices of RS and empirically investigate the linkage between bank regulation and supervision quality and growth in transition economies. Banking laws lay out regulations with regard to bank ownership, management, asset structure, operations, reporting-recording requirements, and such. We argue that the more rule-based the legal regulatory framework, the more transparent, and thus easy to monitor, are the bank operations. This helps reduce the adverse selection and moral hazard problems in the banking sector. (2) It is important to note, however, that the quality of regulation does not necessarily mean strictness of regulation. Rather, by quality we mean the extent of coverage of the regulatory framework, along with appropriate safeguards against the risks in the banking sector. (3) Good supervision reduces the likelihood and the extent of excessive risk taking by banks. As a vehicle to ensure effective implementation of the regulatory practices, supervision of the banking system is therefore as important for the health of the banking sector as regulation. In addition, a (carefully designed) deposit insurance scheme helps improve the quality of both regulation and supervision by mitigating the likelihood of the moral hazard problem in the banking sector. These are all pertinent issues, but measuring the quality of banking regulation and supervision is not a simple task. Like the measurement of the quality of any other institutional attribute, the approach can be mainly of two kinds: (1) evaluation of the letter of the law and (2) surveys. The main advantage of measurement based on various legal attributes is to minimize subjective evaluations regarding an institution, though it may have the disadvantage of not reflecting the practice, especially in case the law is not fully adhered to. On the other hand, although surveys focus on practice, they are also prone to possible subjective judgments of evaluators. (4) Both approaches have their own advantages and disadvantages, but in this article, we take the first approach. (5) We nevertheless concede that additional information can be obtained by reconciling the approaches that can be complementary to each other. To measure the legal bank regulation and supervision quality as objectively as possible, we use various sources to develop a comprehensive set of criteria. Among these sources, we primarily utilize the Basle core principles (BCPs), (6) other Basle guidelines and documents (see BCBS 1998a,b, 1999a,b), and the banking laws of individual countries. …

Finance in Lower Income Countries : An Empirical Exploration

Abstract: This paper considers how a comprehensive set of factors relates to financial sector performance in low-income countries (LICs). It finds that corruption and inflation are associated with a shallower and less efficient financial system, while legal origin and characteristics of the supervisory and regulatory framework have no significant relationship with performance. Moreover, better contract enforcement and information about borrowers are associated with more private sector credit. Some results are surprising. Countries with more foreign bank penetration seem to have shallower and not necessarily more efficient financial sectors, while a larger presence of state-owned banks is correlated with more bank deposits and lower overhead costs, even after controlling for market size and concentration. Although these relationships are robust, more research is needed to ascertain the direction of causality and identify channels of transmission before deriving policy implications.

Endowment Versus Finance: A Wooden Barrel Theory of International Trade

Abstract: This paper develops a theory of international trade in which financial development and factor endowments jointly determine comparative advantage. We apply the financial contract model of Holmstrom and Tirole (1998) to the Heckscher-Ohlin-Samuelson (HOS) model in which firms' dependence on external finance is endogenous, and the demand for external finance is constrained by financial development. The theory nests HOS model as a special case. A key result that emerges is what we call the law of a wooden barrel: if the external finance constraint is binding, then further financial development will increase the output of the industry more dependent on external finance, and decrease the output of the other industry. It is shown that financial development makes both labor and unemployed capital better off, but incumbent capital worse off. Therefore, financial development depends on the relative strength of political forces among labor, unemployed capital owners, and incumbent capital owners. If only the capital constraint is binding, on the other hand, the standard HOS predictions will apply.

The Links between Finance and Inequality: Channels and Evidence

Abstract: This paper focuses on the relationships between inequality and finance. In principle, a better financial system can help overcome barriers, and thereby increase economic growth and reduce inequality. Indeed, a more developed, that is deeper, financial sector has been shown to aid economic growth. Financial reform will only reduce inequality, however, if it improves access for more individuals with growth opportunities. Reforms thus need to broaden, not just deepen financial systems. At the same, as recent theoretical and empirical work has shown, ex ante inequality can hinder welfare enhancing reforms. Concentrated economic and political powers will likely block financial (and other) reforms, or manipulate their design and/or implementation, so that the benefits reach fewer individuals. Also, by design or implementation, financial reforms can lead risks to be allocated unfairly and costs to be socialized, especially around financial crises, further worsening inequality. Furthermore, reforms that do not provide gains for many may be followed by a political backlash that may make even valuable financial sector reforms not sustainable.

Does History Matter? The Old and the New World of Microfinance in Europe and Asia

Abstract: In a number of European countries microfinance evolved from informal beginnings during the eighteenth and nineteenth centuries as a type of banking of the poor, juxtaposed to the commercial and private banking sector. Almost from the onset, microfinance meant financial intermediation between microsavings and microcredit, and was powered by intermediation. Legal recognition, regulation and mandatory supervision evolved in due course and led to a process of mainstreaming during the twentieth century when microfinance became part of the formal banking sector. In Germany, the former microfinance institutions now account for around 50% of banking assets; outreach is to around 90% of the population. Microfinance in Asia presumably has a much longer history, though little seems to be known about the early history of the hui in China, the chit funds in India, the arisan in Indonesia or the paluwagan in the Philippines, to name but a few. Financial institutions of indigenous origin, most of them informal, are still exceedingly widespread but have been largely ignored in financial sector development. There are exceptions on a limited scale, as in India where chit funds are regulated and in Indonesia with its highly diversified rural and microfinance sector where various forms of informal financial institutions have been registered and eventually regulated throughout the twentieth century. Not a single country has made indigenous forms of microfinance a pillar of its modern financial system. As neither commercial nor development banks nor state-dominated but unsupervised cooperatives delivered to the rural and urban masses, credit NGOs, during the 1970s, ushered in what came to be known as the microcredit revolution. Powered by donor support and international publicity, Grameen Banking became the new model of microcredit, its founder the prophet of the microcredit movement. The term microfinance, originally meant to comprise financial intermediation between savers and borrowers, was created only in 1990. In the mid-1990s it was taken up by CGAP, the donor Consultancy Group to Assist the Poor, which has turned the microcredit revolution into the microfinance revolution and professionalized microfinance. To some extent it has reinvented history not only in Europe but also in Asia and elsewhere where micro- or informal finance and indigenous banking have always been based on principles of self-reliance, viability and sustainability. CGAP re-discovered the principles, but not the indigenous financial sector, be it informal or formal. Has the time come to revisit indigenous finance in Asia and re-examine its potential for upgrading, mainstreaming and innovating (Seibel 1997, 2001)? India may serve as an example: far older and more complex, yet also far less conclusive, than the European experience.

Corporate restructuring : Lessons from experience

Abstract: In the wake of the periodic financial crises of the late 1990s, the international financial institutions and many experts have recognized the need for a strategy to avoid and mitigate the severity of crises in the corporate sector. Addressing this problem requires the complementary efforts of policymakers, regulators, lawyers, insolvency experts, corporate restructuring specialists, and financiers. What are the roots of corporate distress? Can systemic corporate crises be predicted? What is the role of legal frameworks in preventing and coping with a crisis? What are the most effective financial techniques for dealing with distressed corporate organizations? This volume takes a multidisciplinary perspective on corporate restructuring, and examines international experiences in dealing with corporate crises.

AML/CFT regulation : implications for financial service providers that serve low-income people

Abstract: Across the world, new measures are being introduced to combat money laundering and the financing of terrorism. All financial service providers, including those working with low-income communities, are-or will-be affected by these measures. This paper summarizes the implications of the international framework for anti-money laundering (AML) and combating the financing of terrorism (CFT) for financial service providers working with low-income people. While each country may adapt the international AML/CFT standards developed by the Financial Action Task Force (FATF), in general, financial service providers are required to: enhance their internal controls to cater specifically for AML/CFT risks; undertake customer due diligence procedures on all new and existing clients; introduce heightened surveillance of suspicious transactions and keep transaction records for future verification; and, report suspicious transactions to national authorities. The paper argues in favor of (1) gradual implementation of new measures; (2) the adoption of a risk-based approach to regulation; and (3) the use of exemptions for low-risk categories of transactions. South Africa provides one example of how a country's AML/CFT regulations can be modified to take into account better the needs of low-income clients. Customer due diligence regulations which require an income tax number and proof of residential address for clients proved too stringent to allow many low-income people to open bank accounts.

A Cross-Country Nonparametric Analysis of Bahrain’s Banking System

Abstract: Bahrain's financial sector development strategy succeeded in building a leading regional banking center, which has become one of the main engines of growth and sources of employment. Although the simulations conducted in the paper suggest that the banking sector in Bahrain continues to occupy a front-runner position among those in a sample of member countries of the Gulf Cooperation Council, they also reveal that: (i) as expected, banks in Bahrain still lag behind their Singaporean counterparts, and (ii) there is strong competition from other countries in the region. The paper also finds that in terms of scale efficiency, the banks in Bahrain operate at the same level as banks in Singapore and their closest competitors in Qatar and the United Arab Emirates. The results appear to be robust with respect to changes in the sample size and model specifications.

World Bank Lending and Financial Sector Development

Abstract: A new database of World Bank loans to support financial sector development is used to investigate whether countries that received such loans experienced more rapid growth on standard indicators of financial development than countries that did not. Self-selection is accounted for with treatment-effects regressions. The results indicate that borrowing countries had significantly more rapid growth in money and quasi money (M2) or gross domestic product (GDP) than non-borrowers and swifter reductions in interest rate spreads and cash holdings (as a share of M2). Borrowers also had higher private credit growth rates than non-borrowers in some treatment-effects regressions but not in standard panel regressions with fixed country effects. On the whole, the results indicate some significant advantages in financial development for borrowers over non-borrowers.

Asian economy and finance : a post-crisis perspective

Abstract: Preface Acknowledgments About the Author 1: ASIAN ECONOMY: THE HERITAGE 11 Past is Prelude to the Future 12 Alternative Historical Perspective on Asian Economy 13 Economic Linkages and Interactions in the Second Millennium 14 Quantitative Dimensions of Growth 15 Past Trends in Trade 16 Industrial Revolution and Its Aftermath 17 Asian Economic 'Miracle' of the Post-War II Era 18 Summary and Conclusion 2: ECONOMIC DIVERSITY IN ASIA 21 Heterogeneity 22 High-Performing Economic Sub-Groups 23 Regional Economies and Economic Groupings 24 Japan-the Domineering Regional Economy 25 Contrasting the Two Populous Giants 26 Newly Industrialized Asian Economies 27 Southeast Asian Economies 28 Post-Crisis Performance 29 Summary and Conclusions 3: MARKET-DRIVEN REGIONALIZATION IN ASIA 31 Introduction 32 Trends in Intra-Regional Trade and Investment 33 Impact of Other RIAs on the Asia-Pacific Economies 34 Need for Regional Co-operation in the Aftermath of the Crisis 35 Impediments to Regionalization 36 Conclusions and Summary 4: CONTEMPORARY INITIATIVES IN INSTITUTIONALIZED REGIONAL INTEGRATION 41 Regional Integration and the Global Economy 42 Agglomeration or Clustering Effect 43 Institutionalized Regional Economic Integration 44 ASEAN-Plus-Three Grouping 45 Asia-Pacific Economic Co-operation Forum 46 Bilateral Trade Agreements 47 Summary and Conclusion 5: TRADE, COMPETITIVENESS AND FOREIGN INVESTMENT AND THE LINKAGES AMONG THEM 51 Outer-Orientation: The Strategic Stance 52 Trade Performance 53 Growing Cohesion in Trading Pattern 54 Competitiveness in Global Market Place 55 Regional Trends in FDI 56 Integrated Production Networks and Refinement of Comparative Advantage 57 Outsourcing in ICT and Business-Process Services 58 China's WTO Accession and its Regional Ramifications 59Summary and Conclusion 6: FINANCIAL SECTOR DEVELOPMENT: STRUCTURE, INSTITUTIONS AND MARKETS 61 Financial Sector: Chink in the Asian Armor 62 The Quality Continuum 63 Financial Market Structure and Country Classification 64 Carrying out Financial Market Development 65 Banking Sector 66 Intermediate Financial Structure 67 Bond Markets 68 Regional Bond Market 69 Equity Markets 610 Risk Management 611 Conclusions and Summary 7: POST-CRISIS REGIONAL ECONOMIC COOPERAT1ON AND THE EMERGING FINANCIAL ARCHITECTURE 71 Realistic Dimension of the Asian Crisis 72 Launching the Chiang Mai Initiative 73 Multilateral and Bilateral Swap Arrangements 74 Future Challenges for the Chiang Mai Initiative 75 Pros and Cons of Institutionalized Regional Cooperation 76 Predilection for a Regional Financial and Monetary Institution 77 Augmenting Foreign Exchange Reserves Holdings 78 Monetary and Central Banking Cooperation 79 Evolution of Exchange Rate Regimes 710 Lessons from the EU Experience 711 Monitoring and Surveillance 712 Summary and Conclusions Bibliography Index

Financing information and communication infrastructure needs in the developing world - public and private roles

Abstract: Over the past ten years, private-sector-led growth has revolutionized access to telecommunications. Every region of the developing world did benefit in terms of investment, and rollout. This revolution would have been impossible without government reform, and oversight. Advanced information and communication infrastructure (ICI) are increasingly important to doing business in a globalizing world. Governments, enterprises, civil society, workers, and poor populations in the developing countries need more affordable access. This report proposes strategies that governments can carry out to attract private investment, and ensure the continued evolution, and spread of information and communication infrastructure. These strategies encompass more than sector policy alone, for investment decisions are based on a wide range of factors including, for example, the roles played by financial sector development, and the broader investment environment. The strategies also include potential public sector investments that can catalyze ICI rollout in sub-sectors where the private sector is not prepared to intervene on its own.

A Cross-Country Nonparametric Analysis of Bahrain's Banking System

Abstract: Bahrain's financial sector development strategy succeeded in building a leading regional banking center, which has become one of the main engines of growth and sources of employment. Although the simulations conducted in the paper suggest that the banking sector in Bahrain continues to occupy a front-runner position among those in a sample of member countries of the Gulf Cooperation Council, they also reveal that: (i) as expected, banks in Bahrain still lag behind their Singaporean counterparts, and (ii) there is strong competition from other countries in the region. The paper also finds that in terms of scale efficiency, the banks in Bahrain operate at the same level as banks in Singapore and their closest competitors in Qatar and the United Arab Emirates. The results appear to be robust with respect to changes in the sample size and model specifications.

Banking Sector Crises and Inequality

Abstract: An apparent temporary narrowing of income inequality has been observed during several recent banking crises. But it would be a mistake to conclude that such crises don't matter for the poor. For one thing, the correlation is not strong, and the opposite pattern has also been present. Besides, the poor are much less able to absorb a cut in income: safety-net policies are crucial during a downturn even if the gap between rich and poor has temporarily narrowed. More fundamentally, distributional shifts during the crisis may be less important than the fact that underlying financial policy and infrastructures conducive to crisis can also be associated with more unequal societies.

The IMF–World Bank Financial Sector Assessment Program: A View from the Inside

Abstract: The International Monetary Fund–World Bank (IMF–WB) Financial Sector Assessment Program, or FSAP, evolved as a response to the Asian financial crisis of the late 1990s. The FSAP program was designed to strengthen the IMF's capacity to perform financial sector surveillance, to identify emerging financial sector vulnerabilities, and help identify financial sector development needs that could be addressed through the IMF–WB technical assistance programs. Internal IMF–WB documents have articulated FSAP program goals that include "help[ing] countries enhance their resilience to crisis and foster[ing] growth by promoting financial stability and financial sector diversity"…

EU Accession — Financial Sector Opportunities and Challenges for Southeast Europe

Abstract: Stimulating the Economy of Southeast Europe.- Setting the Stage for Stability and Progress in Southeast Europe.- The Scenario for EU Accession by Southeast European Countries.- Infrastructure Finance, Accession, and Related Policy Issues in Southeast Europe.- Making It Easier to Do Business in Southeast Europe.- Financial Regulation for Stability and Protection in Southeast Europe.- Financial Sector Development in Southeast Europe - The Roles of EU Accession and Basel II.- Implementing European Standards of Banking Regulation in Georgia.- Issues Concerning Foreign Banks' Operations in Bosnia and Herzegovina.- The Role of Foreign Banks in SEE.- The Impact of Basel II on Banking in Albania and Southeast Europe.- Financial Stability in Southeast Europe - Basel II and the Challenges Ahead.- Bankers' Perspectives - Dynamic Banking in the Changing Market of Southeast Europe.- Bankers' Perspectives - Dynamic Banking in a Changing Market.- Evolution of the Banking Sector in Southeast Europe - The Role and Business Strategies of Domestic Banks.- Financing Small and Medium-Sized Companies.- The Business Strategies of Domestic Banks in the Long Run - SME Lending as an Attractive Market Segment.- Building a Market Niche Also Builds a Market - Opportunity Bank in Montenegro.- Clients' Perspectives on Access to Financial Services for Micro and Small Enterprise in Southeast Europe.- Clients' Perspectives - Providing More Effective Financial Services for Micro and Small Enterprises.- Access to Finance: Issues and Opportunities in Southeast Europe.- Nonfinancial Obstacles to SME Financing in Serbia.- Constraints to Business Development in Bulgaria and the Case for Action.- Degrees of Competition in Serving Target Groups - They May Be Closer than You Think.- A New Approach to Business Development Services in Southeast Europe.- Looking Ahead - Public-Private Partnerships in the Financial Sector in Southeast Europe.- Public-Private Partnerships for Financial Development in Southeast Europe.- Replicable and Transparent PPP Models for Financial Sector Development.- Using PPPs to Facilitate Transactions in Financial Markets.- Sustainable Microfinance Banks - IMI as a Public-Private Partnership in Practice.- Opportunities for Public-Private Partnerships in Financial Sector Development.- Public-Private Partnership - Results in the Banking Sector in Southeast Europe.- Microfinance Investment Funds - An Innovative Form of PPP to Foster the Commercialisation of Microfinance.- Summary and Conclusions.- An Overview of Banking, Financial Regulation, and Access to Financial Services in Southeast Europe in the Context of EU Enlargement.

Financial sector development and productivity growth

Abstract: Recent years have witnessed important structural changes around the world as a result of the globalization process, the creation of new economic blocks and the liberalization of financial sector in many countries. Responding to these changes many sectors of the industrialized countries have gone through major deregulatory changes to acclimate themselves to new environments. At the same time, many countries have undertaken institutional reforms to build a market-orientated financial system in the hope that transition towards market economy will improve productivity. In the face of uncertainty resulting from changes in regulatory structure and the development of financial institutions to foster market economy, many countries may not be able to achieve their maximum growth potential. In other words, productivity growth is likely to depend on the development of financial institutions and the stage of economic development. …/…

Savings and Financial Sector Development: Assessing the Evidence

Abstract: In this valuable new book, a distinguished group of authors takes stock of the existing state of knowledge in the field of finance and the development process. Each chapter offers a comprehensive survey and synthesis of current issues. These include such critical subjects as savings, financial markets and the macroeconomy, stock market development, financial regulation, foreign investment and aid, financing livelihoods, microfinance, rural financial markets, small and medium enterprises, corporate finance and banking.