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World Bank Development Research Group Finance

Overview
Works: 216 works in 404 publications in 1 language and 6,145 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
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
Exchange rate risk management : evidence fron East Asia by George Allayannis( Book )
3 editions published in 2001 in English and held by 65 libraries worldwide
In a large sample of East Asian nonfinancial corporations, firms using foreign currency derivatives had distinctive characteristics, such as larger size and foreign debt exposures. Unlike in studies of U.S. firms, there was only weak evidence that liquidity-constrained firms with greater growth opportunities hedged more. Firms appeared to use foreign earnings as a substitute for hedging with derivatives, and to engage in "selective" hedging. There was no evidence that East Asian firms eliminated their foreign exchange exposure by using derivatives. And firms using derivatives before the crisis performed just as poorly as nonhedgers during the crisis
Global capital flows and financing constraints by Ann E Harrison( Book )
3 editions published in 2002 in English and held by 65 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
Deposit dollarization and the financial sector in emerging economies by Patrick Honohan( Book )
3 editions published in 2001 in English and held by 63 libraries worldwide
An increasing share of bank deposits in developing countries is denominated in foreign currency. This trend may have adverse implications for the cost and availability of credit
Designing financial safety nets to fit country circumstances by Edward J Kane( file )
5 editions published in 2000 in English and held by 61 libraries worldwide
For optimal regulation, one size does not fit all. Differences in countries' informational and contracting environments (in the transparency of information, in protection for counterparties, and in political accountability), influence the design of their financial safety nets and their strategies for managing the breakdown of those nets
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
Financial and legal constraints to firm growth does size matter? by Thorsten Beck( file )
3 editions published in 2002 in English and held by 60 libraries worldwide
Using a unique firm-level survey data base covering 54 countries, Beck, Demirgüç-Kunt, and Maksimovic investigate whether different financial, legal, and corruption issues that firms report as constraints actually affect their growth rates. The results show that the extent to which these factors constrain a firm's growth depends very much on its size and that it is consistently the smallest firms that are most adversely affected by all three constraints. Firm growth is more affected by reported constraints in countries with underdeveloped financial and legal systems and higher corruption. So, policy measures to improve financial and legal development and reduce corruption are well justified in promoting firm growth, particularly the development of the small and medium enterprise sector. But the evidence also shows that the intuitive descriptors of an "efficient" legal system are not correlated with the components of the general legal constraints that predict firm growth. This finding suggests that the mechanism by which the legal systems affects firm performance is not well understood. The authors' findings also provide evidence that the corruption of bank officials constrains firm growth. This "institutional failure" should be taken into account when modeling the monitoring role of financial institutions in overcoming market failures due to informational asymmetries. This paper--a product of Finance, Development Research Group--is part of a larger effort in the group to understand the link from the financial sector to economic development. The authors may be contacted at tbeck@worldbank.org, ademirguckunt@worldbank.org, or vmaksimovic@rhsmith.umd.edu
The value of relationship banking during financial crises evidence from the Republic of Korea by Giovanni Ferri( file )
5 editions published in 2001 in English and held by 59 libraries worldwide
Relationship banking, with surviving banks, has a positive value during a systemic financial crisis. For many viable small and medium-size businesses in the Republic of Korea, relationship banking reduced liquidity constraints and thus diminished the probability of unwarranted bankruptcy during the country's financial crisis of 1997-98
Bank lending to small businesses in Latin America does bank origin matter? by George R. G Clarke( file )
4 editions published in 2002 in English and held by 59 libraries worldwide
Do foreign banks lend less to small and medium enterprises than domestic banks in Developing countries? Analysis of data from four countries in Latin America suggests that although small foreign banks lend less than small domestic banks, the difference for large banks is considerably less
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
Corporate governance, investor protection, and performance in emerging markets by Leora Klapper( file )
4 editions published in 2002 in English and held by 54 libraries worldwide
Recent research studying the link between law and finance has concentrated on country-level investor protection measures and focused on differences in legal systems across countries and legal families. Klapper and Love extend this literature and provide a study of firm-level corporate governance practices across emerging markets and a greater understanding of the environments under which corporate governance matters more. Their empirical tests show that better corporate governance is highly correlated with better operating performance and market valuation. More important, the authors provide evidence showing that firm-level corporate governance provisions matter more in countries with weak legal environments. These results suggest that firms can partially compensate for ineffective laws and enforcement by establishing good corporate governance and providing credible investor protection. The authors' tests also show that firm-level governance and performance is lower in countries with weak legal environments, suggesting that improving the legal system should remain a priority for policymakers. This paper--a product of Finance, Development Research Group--is part of a larger effort in the group to study corporate governance around the world. The authors may be contacted at lklapper@worldbank.org or ilove@worldbank.org
Financing patterns around the world the role of institutions by Aslı Demirgüç-Kunt( file )
3 editions published in 2002 in English and held by 40 libraries worldwide
Using a firm-level survey database covering 48 countries, Beck, Demirgüç-Kunt, and Maksimovic investigate whether differences in financial and legal development affect the way firms finance their investments. The results indicate that external financing of investments is not a function of institutions, although the form of external finance is. The authors identify two explanations for this. First, legal and financial institutions affect different types of external finance in offsetting ways. Second, firm size is an important determinant of whether firms can have access to different types of external finance. Larger firms with financing needs are more likely to use external finance compared with small firms. The results also indicate that these firms are more likely to use external finance in more developed financial systems, particularly debt and equity finance. The authors also find evidence consistent with the pecking order theory in financially developed countries, particularly for large firms. This paper--a product of Finance, Development Research Group--is part of a larger effort in the group to understand firms' access to financial services
Law and finance why does legal origin matter? by Aslı Demirgüç-Kunt( file )
3 editions published in 2002 in English and held by 38 libraries worldwide
A growing body of work suggests that cross-country differences in legal origin help explain differences in financial development. Beck, Demirgüç-Kunt, and Levine assess two theories of why legal origin influences financial development. First, the "political" channel stresses that (1) legal traditions differ in the priority they give to the rights of individual investors compared with the state, and that (2) this has repercussions for the development of property rights and financial markets. Second, the "adaptability" channel holds that (1) legal traditions differ in their ability to adjust to changing commercial circumstances, and (2) legal systems that adapt quickly to minimize the gap between the contracting needs of the economy and the legal system's capabilities will foster financial development more effectively than would more rigid legal traditions. The authors use historical comparisons and cross-country regressions to assess the validity of these two channels. This paper--a product of Finance, Development Research Group--is part of a larger effort in the group to understand the determinants of financial development
The Swiss multi-pillar pension system : triumph of common sense? by Monika Queisser( Book )
4 editions published in 2000 in English and held by 31 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
Bank regulation and supervision : what works best? by James R Barth( Book )
3 editions published in 2001 in English and held by 23 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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