This paper analyzes the role of the financial system for economic growth and stability, and addresses a number of core policy issues for financial sector reforms in emerging economies. The role of finance is studied in the context of a circuit model with interacting rational, forward- looking, and heterogeneous agents. Finance is shown to essentially complement the price system in coordinating decentralized intertemporal resource allocation choices from agents operating under limited information and incomplete trust.
Financial globalization could be described as a process in which global financial activities get increasingly integrated with the risk creation mechanism. This description emphasizes three points. First, financial globalization is not only a process in which financial activities transcend national borders, but also a process in which risks spread across the markets. Second, financial globalization is initiated by many micro-economic entities to seek profits and is driven by the integration of global financial markets. Third, it is a gradually deepening process with distinct phases....
The 1980s and 1990s have been critical periods for Thailand’s development. After an initial period of instability in the early 1980s, Thailand’s economy expanded at an average pace of 9 percent p.a. during 1987–96, while the number of households below the poverty line dropped from 32.6 percent in 1988 to 16.3 percent in 1996.
During this period, Thailand’s economy also underwent deep structural changes, including the liberalization of its financial sector and the integration of its economy with global financial and product markets.
This paper looks at the development of the financial systems of ASEAN-5 countries and Vietnam. By making a comparison between factors that foster the financial development of ASEAN-5 and Vietnam, it suggests that both the two sides share common characteristics including: financial repression, bank based development, accelerating liberalization of the financial sector, capital movement, inefficiency, due to lack of competition, effective governance, and managerial freedom.
Financial sector reforms and the adoption of a more predictable currency system spurred a recovery of the financial sector in 2009. Total deposits in the banking system rose from US$500 million in 2009 to some US$2.5 billion by December 2010. Important vulnerabilities remain6. The Banking sector is highly illiquid, with the bulk of bank lending being short term (90 days or less) with longer-term loans virtually nonexistent. Moreover, the intermediation spread is extremely high with prohibitive lending rates of as high as 30 percent and deposit rates of as low as 2 percent....
For the process of a credit-financed investment expansion described above, the financial
sector is of crucial importance. The Keynesian-Schumpeterian investment-saving nexus can
only work if the financial sector is able and willing to extend credit to companies which wish
to expand production and investment. In order for the process to work, different levels of the
financial sector thus have to interact smoothly and fulfil certain tasks.
Traditional macroeconomic models without financial intermediation describe the transmission
mechanism of monetary policy through a single (risk-free) interest rate. As indicated by Meltzer
, the characterisation of the financial sector in such a simplified manner is likely to miss
important elements in the macroeconomic adjustment mechanisms. A key aspect that is absent
from the traditional framework is an account of how different interest rates embody time-varying
The key driver of the Financial Crisis of 2007–2008 is the interplay of the
following six forces, each of which can be linked to the misperception,
misunderstanding, and the active hiding of the risks of consequential but
low probability events (“Black Swans”) by those that stood to beneﬁt from
the obscuring of consequential risk. Other diagnoses, for example those of
the Financial Crisis Inquiry Commission, focus more on epiphenomenal
aspects of the crisis such as excessive borrowing, risky investments, opacity
of markets, or failures of corporate governance.
Beginning in the 1970s, a microfinance revolution swept through Asia and Latin America, helping countless millions
of poor people get the economic boost they needed to start small businesses and work their way out of poverty.
Somehow, the revolution bypassed Africa: While there are more than 300 million economically active individuals
in sub-Saharan Africa, only about 20 million of them – less than 10 percent – have access to any kind of
formal financial services.
This paper addresses the issue of new service development (NSD) process in the hospitality sector. While it is recognized that there are significant differences between service sectors, much less has been written about differences between separate services, with most studies concentrating on financial services.
This paper addresses issues in financial sector regulation from two perspectives. First, it reports on the state of implementation of financial regulatory standards across banking, insurance, and securities sectors in a select group of Fund member countries. Second, it raises issues relating to the design of these three sector standards, arising from the implementation experience and the evolving structure of financial systems. In this regard, the paper identifies a few emerging regulatory risks and some cross-sectoral issues that may warrant further guidance by standard setters....
Extreme weather is hitting all regions of the globe with increasing
severity. Despite the damage that can and will be caused from these
extreme weather events, certain industries will nevertheless benefit
and certain industries will be hurt. It is the purpose of this book to identify
and evaluate the sectors, industries, companies, and more specifically the
particular stocks, bonds, and futures that will be the winners and losers
as extreme weather events continue to impact the Earth. Every investment
idea in this book will work under the current, global climate condition.
The impact of the crisis further increases the market failure – also driven by increased risk aversion
on the supply side of microfinance - and underlines the need for public support for this emerging
sector in Europe.
In addition to the fundamental structural problems of the microfinance sector in Europe, public
intervention has largely been justified and substantiated with positive externalities, i.e. that social
and financial inclusion generates attractive economic and social returns.
When considering supply side factors, we study characteristics of the financial sector that would
influence the speed of adoption of mutual funds. We examine the effect of bank concentration,
restrictions placed on banks to enter the securities business, the number of distribution channels available
for funds, the presence of an explicit deposit insurance system for banks, and the time and cost to set up a
new fund. We find that nations that restrict banks from entering the securities business have smaller
equity and bond fund sectors. In addition, countries with a...
This paper gives an overview of the global insurance market and emerging trends; the
importance of the insurance sector for economic development; the significance and
elements of an effective regulatory framework; development issues arising from
insurance services liberalization; the importance of insurance as a public good; and the
implications of GATS negotiations for the insurance sector and areas of potential export
interest for developing countries.
In its report to the G7 titled Report of the Financial Stability Forum on Enhancing Market and
the Financial Stability Forum (FSF) requested the Joint Forum to
conduct a stocktaking of the uses of external credit ratings by its member authorities in the
banking, securities and insurance sectors. The request also suggested that authorities
review whether their regulations and/or supervisory policies unintentionally give credit ratings
an official seal of approval that discourages investors from performing their own due
Given the unprecedented—by recent standards—financial crisis
that has devastated the world financial system and extended its
reach into a number of other sectors, political risk insurance has
become even more relevant. At the same time, questions remain as
to whether PRI really covers those risks that investors need covered
The Joint Forum of banking, securities, and insurance supervisors has been working to
enhance mutual understanding of issues related to the supervision of firms operating in each
of the respective sectors. These efforts reflect the development of financial conglomerates,
the increasing globalization of financial markets and the development of new financial
Finally, the analysis of national sanctioning regimes carried out by the Commission, along
with the Committees of Supervisors (now transformed into European Supervisory
Authorities) has shown a number of divergences and weaknesses which may have a negative
impact on the proper application of EU legislation, the effectiveness of financial supervision,
and ultimately on competition, stability and integrity of financial markets and consumer
Unions seem to be perpetually at a crossroads. Those in the private sector have
suffered membershipd eclines for more than 45 years and, even under the dynamic
leadership of AFL-CIPOr esident John Sweeneyt, hey will be hard-pressed
to reverse the powerful tide against unions in the private sector. In government,
union membershiph as been stagnant since the 1980s. Althought here have been
somep ositive incrementalc hangesi n the state legal environmenfto r collective
bargaining, no new comprehensive bargaining laws have been enacted since