1,721,282 research outputs found
Financial Restructuring in Banking and Corporate Sector Crises: What Policies to Pursue?
Full text linkWe review the literature on resolving bank and corporate sector crises to identify government policies that affect the depth of a crisis and the ease and sustainability of recovery, and to analyze their fiscal cost. A consistent framework - including sufficient resources for loss-absorption and private agents facing the right framework of sticks and carrots - is the, although often missing key to successful bank and corporate restructuring. Sustainability of restructuring calls for deeper structural reforms, which often requires dealing with political economy factors up-front. Using data for 687 corporations from eight crisis countries, we find empirically that a package of specific resolution measures can help accelerate the recovery from a crisis. These policies, however, come with significant fiscal costs.
How foreign participation and market concentration impact bank spreads : evidence from Latin America
Full text linkIncreasing foreign participation and high concentration levels characterize the recent evolution of banking sectors'market structures in developing countries. The authors analyze the impact of these factors on Latin American bank spreads during the late 1990s. Their results suggest that foreign banks were able to charge lower spreads relative to domestic banks. This was more so for de novo foreign banks than for those that entered through acquisitions. The overall level of foreign bank participation seemed to influence spreads indirectly, primarily through its effect on administrative costs. Bank concentration was positively and directly related to both higher spreads and costs.Payment Systems&Infrastructure,Banks&Banking Reform,Decentralization,Financial Intermediation,Banking Law,Financial Intermediation,Banking Law,Municipal Financial Management,Financial Crisis Management&Restructuring,Banks&Banking Reform
Revenue-productive income tax structures and tax reforms in emerging market economies - evidence from Bulgaria
Full text linkUsing a household budget survey for 1992, The author shows the poor revenue performance and distributional impact of Bulgaria's personal income tax system. He explores the implications for revenue and income distribution of two alternative tax systems - a flat tax and a progressive but simpler three-brackets tax system. He demonstrates that simpler tax structures with lower tax rates could achieve at least equal revenue and distributional objectives and are superior in terms of efficiency and equity. (The findings are robust when Bulgaria's significant tax evasion is included). But tax changes since 1992 have, if anything, moved Bulgaria even further from a simple income tax system: the number of rates and brackets increased from 7 to 10, and the levels of exemption remain unchanged. (Complex, higher rates complicate administration and enforcement and provide incentives for tax evasions. And in the alternative systems the author explores, the poor are protected with higher exemptions.) Fortunately, the country's personal income tax structure began to move toward less nominal progressivity after Bulgaria's 1997 tax reform program. The tax rate in thetop income bracket was reduced from 52 percent to 40 percent, the number of tax brackets was halved, and the exemption level was increased 20 percent (reducing tax burdens on the poor).Environmental Economics&Policies,Public Sector Economics&Finance,Regional Governance,Tax Policy and Administration,Economic Theory&Research,Governance Indicators,Economic Theory&Research,Public Sector Economics&Finance,Environmental Economics&Policies,Tax Policy and Administration
Measuring aid flows : a new approach
Full text linkDebate about the effectiveness of foreign aid has intensified in recent years, as budgetary pressures on aid have increased in donor countries. Whatever the merits of opposing arguments, the question is: do conventional measures of aid (such as OECD's Net ODA), which lump together grants and loans, accurately reflect true aid flows? The authors analyze the methodological shortcomings of conventional measures of aid and propose a new approach, which measures official aid flows as the sum of grants and the grant-equivalents of official loans (in a new aggregate they call"Effective Development Assistance,"or EDA). They show how results using this conceptually superior measure may differ significantly from conventional aggregates, providing a quite different view on major aid trends. They implement their approach empirically using data on some 40,000 official loans from the World Bank's DRS database--virtually all of the official loans to 133 developing countries from 1975 to 1995. The numerical results underscore several points: 1) The conventional approach has led to systematic overestimates of the concessionality of official loans. This overestimate has increased significantly since the mid-1980s. Conventional methods show a rising trend; the new method shows the opposite. 2) Net ODA increasingly overstates the true aid content of official flows, although the divergence between the two approaches is somewhat muted by the rising relative importance of grants over loans in total official flows.Strategic Debt Management,Economic Adjustment and Lending,Banks&Banking Reform,Payment Systems&Infrastructure,Economic Theory&Research,Economic Adjustment and Lending,Banks&Banking Reform,Strategic Debt Management,Economic Theory&Research,Payment Systems&Infrastructure
Accessing International Capital: Pakistan’s Experience, Prospects, and Policy Implications
Full text linkIn the 1990s accessing international capital markets has become a major source of external financing for many developing countries. The paper reviews Pakistan’s experience in tapping the global financial markets. We conduct a cross-sectional econometric analysis of the factors influencing the access to international equity and debt capital. Results indicate that the factors as suggested in the earlier literature do appear to be influential in determining the access to international capital. The study finds that the role of credit rating in attracting debt flows and of the local capital markets in attracting equity flows is prominent. The rate of economic growth is a major determinant of the access to foreign debt and equity funds. It also appears that the country rating which is based on a comprehensive set of variables indicating the financial health of the country subsumes the other proxies of economic stability and debt management. This study underscores the importance of institutional factors. Areas where improvement is possible to facilitate access to the international capital markets are identified as (1) political and legal environment, including improvements in the quality of the system of civil laws and its enforcement (2) private sector development through sustaining economic liberalisation and privatisation programmes (3) improvement in macro-economic management through a prudent internal and external debt management (4) development of capital markets through, improvements in market operations, enforcement of market regulations, strengthening of financial institutions and effective dissemination of market information.
Two case studies on electronic distribution of government securities: the U.S. Treasury Direct System and the Philippine Expanded Small Investors Program
Full text linkThe case study on the U.S. Treasury Direct examines the evolution of the electronic distribution systems for marketable and nonmarketable government securities, the main objectives, and the basic legal infrastructure and the preconditions enabling the system. The U.S. experience highlights that the enabling environment and infrastructure (for example, in terms of information databases such as Pay.Gov) make a large difference in terms of both the security and convenience that customers can expect in the use of the system. The system also achieved important cost savings for the Bureau of the Public Debt. The case study on the Small Investors Program of the Philippines looks at a program that the Philippine government has been experimenting with to sell its securities directly to retail investors over the Internet. The recently revised version of the program-called the Expanded Small Investors Program-aims to increase access to government securities and distribute them more widely, develop better savings products, and enhance competition in the primary markets for these securities. The authors analyze whether the program's main goals can be achieved while mitigating the risks. Their analysis suggests thatthere are good reasons to believe that the new program will succeed. Still, regular and responsive assessments and adjustments will be required as the program moves forward.International Terrorism&Counterterrorism,Environmental Economics&Policies,Fiscal&Monetary Policy,Payment Systems&Infrastructure,Financial Intermediation,Environmental Economics&Policies,Financial Intermediation,Insurance&Risk Mitigation,Public Sector Economics&Finance,Banks&Banking Reform
Bank Restructuring in Asia: Crisis management in the aftermath of the Asian financial crisis and prospects for crisis prevention -Korea-
Full text linkThis paper analyzes the Korean bank restructuring process that started in the wake of its currency crisis of 1997. Korea suffered a heavy currency crisis that was accompanied, if not caused, by acute shortage of dollar liquidity of Korean banks. The currency crisis was essentially banking crisis. This paper covers topics such as the scheme of capital injection to weak banks, nationalization of insolvent institutions, and setting up a strong financial restructuring agency. Structural problem as well as liquidity problem in banks' balance sheets became serious as the currency crisis deepened. On April 14, 1998, the Government announced the basic restructuring framework aiming to stabilize financial markets. The government's restructuring framework included capital injection to financial institutions, mergers and/or closing down of banks, and asset sales. Regulatory institutions, such as the Korea Asset Management Corporation (KAMCO), the Korea Deposit Insurance Corporation (KDIC) and Financial Supervisory Commission (FSC) were also reorganized or newly created around 1997 and 1998. Bank restructuring in Korea, after all, in the aftermath of the Asian currency crisis is almost over. The focus of government-led bank restructuring is now shifted to create market-oriented reform, to ensure peace-time operation, and to strengthen Korean banks so that Korea will no longer have financial crisis. It should be pointed out that decisive actions with massive public funds to restructure the financial sector in crisis are important for a strong recovery possible in the medium term.
Who gets debt relief ?
Full text linkThe authors use preliminary results from an ongoing effort to construct estimates of debt relief to study its allocation across a sample of 62 low-income countries. They find some evidence that debt relief, particularly from multilateral creditors, has been allocated to countries with better policies in recent years. Somewhat surprisingly, conditional on per capita incomes and policy, more indebted countries are not much more likely to receive debt relief. But countries that have large debts especially to multilateral creditors are more likely to receive debt relief. The authors do not find much evidence that debt relief responds to shocks to GDP growth. Finally, most of the persistence in debt relief is driven by slowly changing country characteristics, indicating that it may be difficult for countries to"exit"from cycles of repeated debt relief.External Debt,Banks&Banking Reform,Strategic Debt Management,Foreign Direct Investment,Economic Theory&Research
Will Debt Relief Make a Difference? Impact and Expectations of the Multilateral Debt Relief Initiative
Full text linkThe Multilateral Debt Relief Initiative (MDRI) is the latest phase of debt reduction for poor countries from the World Bank, the IMF, and the African Development Bank. The MDRI, which will come close to full debt reduction for at least 19 (and perhaps as many as 40) qualifying countries, is being presented as a momentous leap forward in the battle against global poverty. However, the analysis in this paper suggests that the actual gains may be more modest and elusive. This is not because, as some anti-debt campaigners fear, that the initiative is a mere accounting trick. Rather, the limited short-term financial impact of the MDRI on affected countries is because the debt service obligations being relived were themselves relatively insignificant. For example, in 2004 the average African country in the program paid $19 million in debt service to the World Bank, but received 10 times that amount in new Bank credit and more than 50 times as much in total aid. Just as importantly, finances are rarely the binding constraint on poverty and other development outcomes. This is not to say that the MDRI is futile. Indeed the impact could be considerable over the long-term, especially on the ability of creditors to be more selective in the future. But most of the impact of the MDRI will be long-term and difficult to measure. As such, expectations of the effect on indebted countries and development indicators should be kept modest and time horizons long.Debt reief, multilateral, foreign aid, poverty, development
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