1,721,039 research outputs found
Financial Sector Policy for Developing Countries : A Reader
Full text linkThe dramatic events of the late 1990s,
which followed a wave of financial crises going back to the
early 1980s, brought to center stage the issue of financial
sector policy in developing countries. Many recent books
have presented a chronology and interpretation of the
crises, but it is little apreciated that these financial
sector problems had been brewing for decades and that a
small number of scholars had long been evolving an approach
to undertanding the structure and dynamics of these sectors.
Spearheaded by a group led by Millard Long, the World Bank
began studying more than 20 years ago the problems, risks,
and policy solutions surrounding private finance. This
volume contains a collection of essays drawing on that
accumulated experience and offering a wide perspective based
on extensive real-world institutional experience. They are a
useful reader on a wide range of the financial policy issues
that are central in developing economies today. They reflect
also the evolving approach of the Bank's financial
sector team and represent the knowledge that the team has
accumulated over the years
The mechanics and regulation of variable payout annuities
Full text linkThis paper discusses the mechanics and regulation of participating and unit-linked variable payout annuities. These annuities offer benefits that are not fixed in either nominal or real terms but depend on the performance of the fund or funds in which the underlying reserve assets are invested, their profit sharing features, and the treatment of longevity risk. The paper focuses on the treatment of investment and longevity risks by different types of these annuities and underscores the challenge of establishing a robust and effective framework of regulation and supervision for these products. The paper also addresses the exposure of annuitants to integrity risk and places special emphasis on the need for a high level of meaningful transparency.Debt Markets,Insurance&Risk Mitigation,Investment and Investment Climate,Pensions&Retirement Systems,Non Bank Financial Institutions
The payout phase of pension systems : a comparison of five countries
Full text linkThis paper provides a comparative summary of the payout phase of pension systems in five countries -- Australia, Chile, Denmark, Sweden, and Switzerland. All five countries have large pension systems with mandatory or quasi-mandatory retirement savings schemes. But they exhibit important differences in the structure and role of different pillars, regulation of payout options, level of annuitization, market structure, capital regulations, risk management, and use of risk sharing arrangements. The paper summarizes the experience of these countries and highlights the lessons they offer to other countries.Pensions&Retirement Systems,Debt Markets,Emerging Markets,Insurance&Risk Mitigation,Investment and Investment Climate
Designing the payout phase of funded pension pillars in central and eastern European countries
Full text linkOver the past decade or so, most Central and Eastern European countries have reformed their pension systems, significantly downsizing their public pillars and creating private pillars based on capitalization accounts. Early policy attention was focused on the accumulation phase but several countries are now reaching the stage where they need to address the design of the payout phase. This paper reviews the complex policy issues that will confront policymakers in this effort and summarizes recent plans and developments in four countries (Poland, Hungary, Estonia, and Lithuania). The paper concludes by highlighting a number of options that merit detailed consideration.Debt Markets,Pensions&Retirement Systems,Financial Literacy,Insurance&Risk Mitigation,Investment and Investment Climate
Swiss Chilanpore : the way forward for pension reform?
Full text linkMany countries are considering far-reaching pension reform. This is happening in response to growing demographic pressures in some countries (especially in Western and Eastern Europe), to unsustainably generous benefits in others (especially in Latin America), or to failure to ensure the profitable investment of accumulated funds (as seems to be true with national provident funds in African countries). Given the worldwide interest in reform, one could ask: Is there a blueprint for pension reform? Can lessons learned in different countries be combined in a best-practice structure usable in different countries'pension systems? The author reviews the experience of Switzerland, Chile and Singapore, countries with relatively successful economies and pension systems. He suggests a multipillar pension system - which he dubs Swiss Chilanpore - that would blend the hard-headed softness of the Swiss, the expensive yields of the Chilean scheme, and the ruthless efficiency of Singapore. He emphasizes that: there is no perfect pension system - all systems suffer from the problems of moral hazard, adverse selection agency costs, and free riders; and all well-functioning pension systems require good government and good management. All pension systems have to cope with the problems of long-term uncertainty. For these reasons, the author favors a multipillar approach that diversifies across different providers. Swiss Chilanpore would have two compulsory and two voluntary pillars: a first pillar (drawn from the Swiss model) consisting of two parts, a flat-rate pension proportional to the length of a person's career and an earnings-related pension based on annual actualized lifetime earnings; a second pillar consisting of a central agency, which could be public or private, for record-keeping and other centralized functions, and private fund management companies for investing funds, the point being to keep operating costs down and achieve high investment returns; and third and fourth pillars based on occupational pension schemes and personal savings. The proposed structure would aim to combine the strengths and avoid the weaknesses of the three countries'systems, but the author cautions that no reform proposal would apply equally well in all countries, regardless of local circumstances and conditions.Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Information Technology,Pensions&Retirement Systems
The impact of regulation on financial intermediation
Full text linkThis paper classifies financial regulations by their primary objective into six types: macroeconomic, allocative, structural, prudential, organizational, and protective. The author notes that the most regulations have effects that cut across different objectives and that structural controls are the most controversial types of financial regulation. The author maintains that many of the problems facing the United States financial system, such as the fragmented and fragile banking system, the financial crisis of the thrift industry, and the segmented banking and nonbanking parts of the financial system, can be attributed to the adverse effects of structural regulation. Finally, he argues that the most important task facing policymakers is creating a sound and robust financial constitution that governs what financial institutions are permitted to do and what basic conditions they have to meet. But, he adds that the financial constitution needs to be as far as possible neutral between different types of financial intermediaries and markets. Such a framework would contribute to higher efficiency and stability in the first place and would thus avoid the cost of later interventions.Financial Intermediation,Banks&Banking Reform,Environmental Economics&Policies,Insurance&Risk Mitigation,Insurance Law
Measuring commercial bank efficiency : use and misuse of bank operating ratios
Full text linkMeasuring bank efficiency is difficult because there is no satisfactory definition of bank output. Neither the number of accounts nor total assets, total loans, nor total deposits provide a good index of output. Moreover, the value added of banks - given by their labor costs and profits - measures both the output and cost of banking. Many analysts use accounting data on bank margins, costs and profits as measures of bank efficiency. But the usefulness of such data is undermined by substantial structural and accounting differences across countries, among individual banks and over time. Great caution and extensive knowledge of local banking conditions are required to interpret bank ratios. The author uses three sets of operating ratios to discuss the impact of differences in structure and practice on bank performance: operating asset ratios; operating income ratios; and operating equity ratios. The author also uses return-on-equity (ROE) analysis to highlight the effects of differences in banking structure and practice. The author's analysis is applied to the performance of banks in OECD countries in the 1980s. The analysis has major implications for assessing bank performance in developing countries, where inflation, higher risk, and operating inefficiencies often cause cost and other bank ratios to be generally higher than in OECD countries.Banks&Banking Reform,Economic Theory&Research,International Terrorism&Counterterrorism,Environmental Economics&Policies,Financial Intermediation
Institutional investors and securities markets : which comes first?
Full text linkInstitutional investors comprise pension funds, insurance companies, and mutual funds. Should a country promote their creation if it lacks well-developed securities markets? The answer to this question, says the author, varies by type of investor. He argues that private pension funds and insurance companies are promoted for their own sake and for their potential economic, fiscal, and financial benefits, whether or not a country already has well-developed securities markets. Mutual funds, by contrast, are unlikely to thrive without strong and well-regulated securities markets. A limited supply of financial instruments should not be a major obstacle to the creation of pension funds and insurance companies. Such institutions build up their financial resources gradually but steadily, giving reforming governments ample time to develop securities markets. More important than the prior development of securities markets is a strong and lasting political commitment to holistic reform: macroeconomic, fiscal, banking, and capital market reform, as well as pension and insurance reform. Institutional investors need to attain critical mass and to be supported by conducive regulations. The author reviews Anglo-American experience since the 1940s. This shows that institutional investors can serve as a countervailing force to commercial and investment banks, helping to stimulate financial innovation, modernize capital markets, enhance transparency and disclosure, strengthen corporate governance, and improve financial regulation.Financial Intermediation,Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Infrastructure Finance,Non Bank Financial Institutions,Financial Intermediation,Infrastructure Finance,Infrastructure Finance,Non Bank Financial Institutions,Insurance&Risk Mitigation
Pension reform and capital market development -"feasibility"and"impact"preconditions
Full text linkThe link between pension reform, and capital market development, has become a perennial question, raised every time the potential benefits, and pre-conditions of pension reform are discussed. The author asks two questions. First, what are the basic"feasibility"pre-conditions for the successful launch of a pension reform program? And second, what are the necessary"impact"pre-conditions for the realization of the potential benefits of funded pension plans for capital market development? His main conclusion is that the feasibility pre-conditions, are not as demanding as is sometimes assumed. In contrast, the impact pre-conditions are more onerous. The most import feasibility pre-condition is a strong, and lasting commitment of the authorities to maintaining macroeconomic, and financial stability, fostering a small core of solvent, and efficient banks, and insurance companies, and creating an effective regulatory, and supervisory agency. Opening the domestic banking, and insurance markets to foreign participation, can easily fulfill the second requirement. The main impact pre-conditions include the attainment of critical mass; the adoption of conducive regulations, especially on pension fund investments; the pursuit of optimizing policies by the pension funds; and, a prevalence of pluralistic structures. The author argues that pension funds are neither necessary, nor sufficient for capital market development. Other forces, such as advances in technology, deregulation, privatization, foreign direct investment, and especially regional, and global economic integration, may be equally important. But pension funds are critical players in"symbiotic"finance, the simultaneous and mutually reinforcing presence of many important elements of modern financial systems. They can support the development of factoring, leasing, and venture capital companies, all of which specialize in financing new, and expanding small firms.Infrastructure Finance,International Terrorism&Counterterrorism,Pensions&Retirement Systems,Payment Systems&Infrastructure,Non Bank Financial Institutions,Pensions&Retirement Systems,Economic Theory&Research,Infrastructure Finance,Infrastructure Finance,Non Bank Financial Institutions
The role of non-bank financial intermediaries (with particular reference to Egypt)
Full text linkNon-bank financial intermediaries (NBFIs) comprise a mixed bag of institutions, ranging from leasing, factoring, and venture capital companies to various types of contractual savings and institutional investors (pension funds, insurance companies, and mutual funds). The common characteristic of these institutions is that they mobilize savings and facilitate the financing of different activities, but they do not accept deposits from the public. NBFIs play an important dual role in the financial system. They complement the role of commercial banks by filling gaps in their range of services. But they alsocompete with commercial banks and force them to be more efficient and responsive to the needs of their customers. Most NBFIs are also actively involved in the securities markets and in the mobilization and allocation of long-term financial resources. The state of development of NBFIs is usually a good indicator of the state of development of the financial system. The author focuses on contractual savings institutions, namely pension funds and life insurance companies, that are by far the most important NBFIs. He also offers a brief review of the role and growth of other NBFIs, such as leasing and factoring companies, as well as venture capital companies and mutual funds. The author covers developments in selected countries in different regions of the world. He also examines the recent growth of NBFIs, especially contractual savings institutions and securities markets, in Egypt. He discusses the necessary regulatory and other policy reforms for promoting NBFIs--in particular, the openness to international markets and foreign presence that is essential for the transfer of skills and technologies.Banks&Banking Reform,Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Insurance&Risk Mitigation,Financial Intermediation,Banks&Banking Reform,Financial Intermediation,Insurance&Risk Mitigation,Contractual Savings,Non Bank Financial Institutions
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