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World Bank Development Research Group Finance

Overview
Works: 200 works in 403 publications in 1 language and 6,205 library holdings
Classifications: HG3881.5.W57, 332.1
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Publications about World Bank
Publications by World Bank
Most widely held works by World Bank
Market discipline and financial safety net design by Aslı Demirgüç-Kunt( Book )
3 editions published in 1999 in English and held by 71 libraries worldwide
It is difficult to design and implement an effective safety net for banks, because overgenerous protection of banks may introduce a risk-enhancing moral hazard and destabilize the very system it is meant to protect. The safety net that policymakers design must provide the right mix of market and regulatyory discipline, enough to protect depositors without unduly undermining market discipline on banks
The credit channel at work : lessons from the Republic of Korea's financial crisis by Giovanni Ferri( Book )
4 editions published in 1999 in English and held by 71 libraries worldwide
When negative monetary and financial shocks hit the Korean economy, reactions in the financial system amplified the impact of the shocks by reducing the credit available and increasing its cost. This particularly hurt segments of the economy that rely heavily on bank credit for external financing, such as small and medium-sized enterprises
The effect of foreign entry on Argentina's domestic banking sector by George R. G Clarke( Book )
3 editions published in 1999 in English and held by 70 libraries worldwide
August 1999 Foreign banks entering Argentina's domestic banking sector in the mid-1990s did not merely follow their clients abroad. They exerted competitive pressure on domestic Argentine banks, especially those focused on mortgage lending or manufacturing. Overhead, profitability, and interest margins were affected least in domestic banks focused on consumer lending, an area in which foreign investors showed little interest. Clarke, Cull, D'Amato, and Molinari analyze how foreign entry affected domestic banks in Argentina during an especially intense period of entry in the mid-1990s. Their results are consistent with the hypothesis that foreign banks enter areas where they have a competitive advantage, putting pressure on the domestic banks already focused on that type of lending. They find that domestic banks with loan portfolios concentrated in manufacturing - an area to which foreign banks have traditionally devoted much of their lending - tended to have lower net margins and lower before-tax profits than other domestic banks. The informational advantages local banks enjoyed probably helped ensure that foreign banks would not drive them from the market. Domestic banks with greater consumer lending - an area in which foreign banks have not been heavily involved - had higher net margins and greater before-tax profits. Domestic banks that focused on mortgage lending - an area foreign banks entered aggressively in the mid-1990s - experienced falling net margins and increasing overhead. There were many domestic bank failures in the mid-1990s, but the banks that failed were not heavily concentrated in the types of lending favored by foreign banks. This paper - a product of Regulation and Competition Policy and Finance, Development Research Group - is part of a larger effort in the group to investigate the determinants of structural change in developing countries' banking sectors. The authors may be contacted at gclarke@worldbank.org, rcull@worldbank.org, amolinari@worldbank.org, or investig.monetar@bcra.gov.ar (attention: Laura D'Amato)
Will the Euro trigger more monetary unions in Africa? by Patrick Honohan( Book )
4 editions published in 2000 in English and held by 69 libraries worldwide
The arrival of the euro widens the options for a common peg for African currencies but need not shift the balance of advantages in favor of adopting several common currency arrangements in Africa
Provincial bank privatization in Argentina : the why, the how, and the so what? by George R. G Clarke( Book )
3 editions published in 1999 in English and held by 68 libraries worldwide
August 1999 Argentina's recently privatized provincial banks generate much of their income through service contracts with the provinces, and the transition to commercial banking has been challenging. Available evidence suggests improvements in post-privatization performance, but it is uncertain whether these are sustainable. At the very least, however, a fiscal burden has been lifted from the provinces. Argentina's provinces offer a unique opportunity to study bank privatization because so many transactions took place there in so short a period in the 1990s (1994-98). As the decade started, every province owned at least one bank, performance in publicly owned provincial banks was substantially worse than in private banks, and the losses incurred imposed substantial fiscal costs on the provinces. Politicians whose provinces were in dire fiscal straits, their banks losing money at a fast rate, were most willing to seize opportunities to privatize, even though overstaffed provincial banks were harder to privatize. Deposit loss and liquidity problems associated with the Tequila crisis made privatization more likely. The right political situation is necessary but not sufficient to ensure good privati-zations. First, one must find a buyer, and Argentina's provincial banks were the least attractive in the banking sector. So the provinces settled for purchasers that were not first-tier banks. Many of them were small wholesale banks that had to make the difficult transition to retail banking. Three important concessions were made to purchasers: contracts to provide post-privati-zation services to the provinces, portfolio guarantees, and the assumption of only good assets. In return, provincial politicians were granted restrictions on branch closings and layoffs of bank employees. Both types of accommodation were costly to the purchasers and the provinces. These transactions probably could not have been completed without long-term loans from the Fondo Fiduciario. Were the Fondo Fiduciario loan funds put to good use? Did privatization leave provincial banking on a sounder footing? Initial indications are that the situation has improved in most provinces. And the provinces experiencing post-privatization difficulties tend not to have participated fully in the Fondo Fiduciario privatization program. But the privatized banks rely on their service contracts with provinces to generate a big share of their income and are having trouble making the transition to commercial banking. It is uncertain whether the newly created banks are sustainable. But at least a fiscal burden has been lifted from the provinces. This paper - a product of Regulation and Competition Policy and Finance, Development Research Group - is part of a larger effort in the group to investigate the determinants of structural change in developing countries' banking sectors. The authors may be contacted at gclarke@worldbank.org or rcull@worldbank.org
Global capital flows and financing constraints by Ann E Harrison( Book )
3 editions published in 2002 in English and held by 67 libraries worldwide
Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease the financing constraints of host country firms. But if incoming foreign investors borrow heavily from domestic banks, foreign direct investment may exacerbate financing constraints by crowding host country firms out of domestic capital markets. Combining a unique cross-country firm-level panel with time-series data on restrictions on international transactions and capital flows, Harrison, Love, and McMillan find that different measures of global flows are associated with a reduction in firm-level financing constraints. First, the authors show that one type of capital inflow--foreign direct investment--is associated with a reduction in financing constraints. Second, they test whether restrictions on international transactions affects the financing constraints of firms. The results suggest that only one type of restriction--those on capital account transactions--negatively affects firms' financing constraints. The authors also show that multinational firms are not financially constrained and do not appear to be sensitive to the level of foreign direct investment. This implies that foreign direct investment eases financing constraints for non-multinational firms. Finally, the authors show that (1) foreign direct investment only eases financing constraints in the non-G7 countries, and (2) other kinds of flows, such as portfolio investment, have no impact on financing constraints. This paper--a product of Finance, Development Research Group--is part of a larger effort in the group to study access to finance. The authors may be contacted at harrison@are.berkeley.edu, ilove@worldbank.org, or mmcmilla@tufts.edu
Bank-based and market-based financial systems : cross-country comparisons by Aslı Demirgüç-Kunt( Book )
2 editions published in 1999 in English and held by 67 libraries worldwide
July 1999 Financial systems tend to be more market-based in higher income countries, where stock markets also become more active and efficient than banks. Financial systems also tend to be more market-based, even after controlling for income, in countries with a common law tradition, strong protection of shareholder rights, good accounting standards, low levels of corruption, and no explicit deposit insurance. What are the relative advantages and disadvantages of bank-based financial systems (as in Germany and Japan) and market-based financial systems (as in England and the United States). Does financial structure matter? In bank-based systems banks play a leading role in mobilizing savings, allocating capital, overseeing the investment decisions of corporate managers, and providing risk management vehicles. In market-based systems securities markets share center stage with banks in getting society's savings to firms, exerting corporate control, and easing risk management. The unresolved debate about whether markets or bank-based intermediaries are more effective at providing financial services hampers the formation of sound policy advice. Demirgüç-Kunt and Levine use newly collected data on a cross-section of roughly 150 countries to illustrate how financial systems differ around the world. They (1) analyze how the size, activity, and efficiency of financial systems differ across different per capita income groups, (2) define different indicators of financial structure and identify different patterns as countries become richer, and (3) investigate legal, regulatory, and policy determinants of financial structure after controlling for per capita GDP. A clear pattern emerges: * Banks, other financial intermediaries, and stock markets all grow and become more active and efficient as countries become richer. As income grows, the financial sector develops. * In higher income countries, stock markets become more active and efficient than banks. Thus, financial systems tend to be more market based. * Countries with a common law tradition, strong protection for shareholder rights, good accounting standards, low levels of corruption, and no explicit deposit insurance tend to be more market-based, even after controlling for income. * Countries with a French civil law tradition, poor accounting standards, heavily restricted banking systems, and high inflation generally tend to have underdeveloped financial systems, even after controlling for income. This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to study the impact of financial structure on economic development. The authors may be contacted at ademirguckunt @worldbank.org or rlevine@csom.umn. edu
The Swiss multi-pillar pension system triumph of common sense? by Monika Queisser( file )
5 editions published in 2000 in English and held by 64 libraries worldwide
Switzerland is the first country to have publicly articulated the benefits of a multi-pillar approach to pensions and the first OECD country to have mandated that employers provide occupational pension plans for their employees. Not surprising, the Swiss system has many unique and attractive features
Inside the crisis an empirical analysis of banking systems in distress by Aslı Demirgüç-Kunt( file )
5 editions published in 2000 in English and held by 63 libraries worldwide
Contemporary banking crises are not accompanied by declines in aggregate bank deposits, and credit does not fall relative to output, but the growth of both deposits and credit does slow down substantially. Output recovery begins the second year after the crisis and is not led by a resumption of credit growth. Instead, banks (including the stronger banks) reallocate their asset portfolio away from loans
Financial structure and economic development firm, industry, and country evidence by Thorsten Beck( file )
6 editions published in 2000 in English and held by 62 libraries worldwide
A country's level of financial development and the legal environment in which financial intermediaries and markets operate critically influence economic development. In countries whose financial sectors are more fully developed and whose legal systems protect the rights of outside investors, economies grow faster, industries dependent on external finance expand more quickly, new firms are created more easily, firms have more access to external financing, and firms grow faster
Financial development and international trade is there a link? by Thorsten Beck( file )
5 editions published in 2001 in English and held by 61 libraries worldwide
Economies with better developed financial sectors have a comparative advantage in manufacturing industries. A two-sector model shows the sector with large scale economies profiting more than the other from a well-developed financial sector. In countries with higher levels of financial development, manufactured exports represent a higher share of GDP and of merchandise exports, and those countries have a higher trade balance in manufactured goods
Financial dependence and international trade by Thorsten Beck( file )
5 editions published in 2001 in English and held by 61 libraries worldwide
Does financial development translate into a comparative advantage in industries that use more external finance? Yes, it does
The regulation and supervision of banks around the world a new database by James R Barth( file )
5 editions published in 2001 in English and held by 60 libraries worldwide
This new and comprehensive database on the regulation and supervision of banks in 107 countries should better inform advice about bank ewgulation and supervision and lower the marginal cost of empirical research
Bank privatization in Argentina a model of political constraints and differential outcomes by George R. G Clarke( file )
5 editions published in 2001 in English and held by 59 libraries worldwide
July 2001 In describing outcomes, the literature on privatization has paid little attention to politicians' incentives, perhaps because it lacked the kinds of evidence needed to do so. Evidence from the privatization of provincial Argentine banks in the 1990s indicates that transaction contract features vary systematically with proxies for politicians' incentives. Will variation in transaction features have implications for post-privatization performance? Based on results from country case studies, many researchers have claimed that political constraints affect bank privatization transactions, which in turn affect the post-privatization performance of the banking sector. But no study has either econometrically tested how political constraints affect bank privatization transactions or theoretically modeled the privatization transaction. Clarke and Cull present a simple theoretical framework that models the inherent tradeoffs faced by governments and potential buyers in privatization transactions involving banks. The potential buyer is concerned about the probability that the bank will remain solvent, about the profits it will earn after privatization, and about the price paid for the assets and liabilities. The government is concerned about the price received for the assets, about layoffs, and about service coverage after privatization. The evidence from bank privatization transactions in Argentina in the 1990s supports several of their theoretical predictions. In particular, provinces with high fiscal deficits were willing to accept layoffs and to guarantee a larger part of the privatized bank's portfolio in return for a higher price. The tequila crisis (Mexico's economic crisis in 1994-95) meant that politicians could protect fewer jobs and had to assume a greater share of their public banks' assets. Evidence of better performance at banks privatized after Mexico's crisis suggests that, by tying politicians' hands, the crisis may have brought unforeseen benefits. This conjecture awaits further empirical validation, but Clarke and Cull hope that by explicitly incorporating the incentives politicians face, analysis can begin to address the question of why some privatizations succeed more than others. This paper--a joint product of Regulation and Competition Policy and Finance, Development Research Group--is part of a larger effort in the group to understand the causes and consequences of bank privatization. The authors may be contacted at gclarke@worldbank.org or rcull@worldbank.org
The role of foreign investors in debt market development conceptual frameworks and policy issues by Jeong Yeon Lee( file )
4 editions published in 2000 in English and held by 59 libraries worldwide
What environment must a host country create to take full advantage of foreign investors?
Determinants of life insurance consumption across countries by Thorsten Beck( file )
4 editions published in 2002 in English and held by 58 libraries worldwide
The importance of life insurance companies as part of the financial sector has significantly increased over the past decades, both as provider of important financial services to consumers and as a major investor in the capital market. However, Beck and Webb still observe a large variance in life insurance consumption across countries, which raises the question of its determinants. The authors use a greatly expanded data set on life insurance consumption to examine the determinants of the demand and supply of life insurance products across countries and over time. Using a cross-sectional sample of 63 countries averaged over 1980-96, Beck and Webb find that educational attainment, banking sector development, and inflation are the most robust predictors of life insurance consumption, while income is only a weak predictor. The results on educational attainment and inflation are confirmed in a panel of 23 countries over the period 1960-96. The results strengthen the case for promoting price stability, financial sector reform, and an efficient education system if life insurance and its many benefits are to be fully realized in an economy. This paper--a product of Finance, Development Research Group--is part of a larger effort in the group to understand the link between financial and economic development. The authors may be contacted at tbeck@worldbank.org or webb@iifdc.org
Deposit insurance and financial development by Robert J Cull( file )
4 editions published in 2001 in English and held by 58 libraries worldwide
Do deposit insurance programs contribute to financial development? Yes, but only if the regulatory environment is sound
The relevance of index funds for pension investment in equities by Ajay Shah( file )
5 editions published in 2000 in English and held by 58 libraries worldwide
The case for index funds is predicated on the observed inability of active managers to outperform market indexes over long periods. Agency conflicts between investors and fund managers are another important motivation, as index funds benefit from simple, unambiguous accountability
The ability of banks to lend to informationally opaque small businesses by Allen N Berger( file )
6 editions published in 2001 in English and held by 57 libraries worldwide
Large and foreign-owned institutions may have difficulty extending relationship loans to informationally opaque small firms. Bank distress does not appear to affect small business lending, although even small firms may react to bank distress by borrowing from multiple banks
Bank regulation and supervision : what works best? by James R Barth( file )
4 editions published in 2001 in English and held by 56 libraries worldwide
The regulatory and supervisory practices most effective in promoting good performance and stability in the banking sector are those that force accurate information disclosure, empower private sector monitoring of banks, and foster incentives for private agents to exert corporate control
 
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