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World Bank Development Research Group Finance

Overview
Works: 207 works in 421 publications in 1 language and 6,694 library holdings
Publication Timeline
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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 )
4 editions published in 1999 in English and held by 72 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 72 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
Bank-based and market-based financial systems : cross-country comparisons by Aslı Demirgüç-Kunt( Book )
3 editions published in 1999 in English and held by 68 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 relevance of index funds for pension investment in equities by Ajay Shah( file )
5 editions published in 2000 in English and held by 59 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 58 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
The effect of foreign entry on Argentina's domestic banking sector by George R.G Clarke( Book )
4 editions published in 1999 in English and held by 1 library 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)
Provincial bank privatization in Argentina : the why, how, and "so what?" by George R. G Clarke( Book )
4 editions published in 1999 in English and held by 1 library 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
 
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