Financial sector development

About: Financial sector development is a research topic. Over the lifetime, 1674 publications have been published within this topic receiving 90787 citations.

Competition and Complementarity: KfW’s Approach to Financial Sector Development in Southeast Europe

Abstract: A few years ago, KfW was mandated by the German government, the European Commission and other bilateral and multilateral donors to design an appropriate approach to support financial sector development in Southeast Europe. In view of the extent of the social and economic crises in the region, it is particularly remarkable that the KfW-managed financial sector programmes have yielded such significant results in such a short period of time.

Foreign Bank Presence and Financial Development in Emerging Market and Developing Economies: An Empirical Investigation

Abstract: This chapter empirically examines the relationship between foreign bank presence and financial development in a panel framework covering 57 emerging market and developing economies (EMDEs) over 1995–2009. Specifically, the chapter undertakes an empirical investigation of three inter-related questions: One, how does greater foreign bank presence affect domestic credit creation in EMDEs? Two, are there threshold levels of foreign bank presence associated with financial sector development? Three, is the relationship between foreign banks and financial development conditional on the presence of a threshold level of institutional environment? While we find a positive relationship between foreign banks and financial development in general, the empirical results suggest that a strong information environment tends to strengthen the beneficial impact that foreign banks can have on financial development.

Payment systems in Latin America : a tale of two countries - Colombia and El Salvador

Abstract: Payment systems include all the paper (including cash) and electronic systems a country uses to exchange financial value to discharge obligations. Financial markets rely on promptness and certainty of payment and settlement for borrowing and investing. Consumers want convenience, choice (of payment options), privacy, and low cost. Inefficiencies in payment systems cause a drag on the national economy. The authors compare trends and areas for improvement in payment systems in Colombia and El Salvador, two countries that differ in size, volume of check-based transactions, and national issues. Check standards have developed slowly in both countries, which has retarded automation, particularly in Colombia, where the volume of checks handled makes manual processing unmanageable. Both countries need stronger leadership from central banks and bankers associations; incentives to adopt common check standards; streamlined check sorting and encoding, microfilming, and manual data processing; alternative (especially credit-based) payment mechanisms and private check-processing bureaus; and settlement of stock exchange transactions through several banks, rather than one bank. The countries differ in important ways: 1) it will be easier to reach economies of scale in check processing in Colombia (which has too many local clearinghouses) than in El Salvador (which has too few). Both countries need a more balanced approach; 2) same day payments are possible in Colombia; payments in El Salvador are next day, at best; 3) financial markets are less mature in El Salvador and may not need to be as sophisticated as markets in other countries; and 4) Colombia has yet to create effective disincentives for writing checks against insufficient funds. Both countries must take certain actions to develop a system for electronic payment and the settlement of payments at the central bank: 1) draft new laws and regulations; 2) provide more systematic data collection and analysis of payment flows; 3) undertake more risk analysis and prevention in the central banks and supervisory agencies, and draft contingency plans for major failures; 4) reexamine the dual roles of the central banks and other government agencies in operating and supervising payment systems; 5) review check-clearing pricing policies; and 6) analyze the economics of automating check processing.

Why Has Latin America Sped Up Ahead of the Philippines in Economic and Political Reform

Abstract: This paper compares trends in key economic, political and social development outcomes in the Philippines with those of Latin America, particularly since the 1990s. To do so, it uses standard indicators of development, including measures of institutional quality and good governance. The paper finds that Latin America is not only at a higher level of development, but has also made faster progress in most areas than the Philippines. This is especially the case as regards GDP per capita, poverty, education, health, infrastructure, social protection, right to life and security of the person and corruption. The Philippines, however, performs significantly better as regards gender and race and in some “niche” areas of ICT, including high-tech exports, while posting slightly higher ratings in government effectiveness. Both regions do well in the areas of macro-economic management and financial sector development. Overall performance as regards the quality of democracy is also roughly comparable. The paper argues that key policy drivers of the divergence include Latin America’s: a) higher and better public spending; b) greater transparency and integrity in both the public and private sectors; and c) freer and more competitive markets.