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  • 1995-1999  (4)
  • Honohan, Patrick  (4)
  • Washington, D.C : The World Bank  (4)
  • Financial Literacy  (4)
  • Social Protections and Labor
  • 1
    Online Resource
    Online Resource
    Beyond Capital Ideals : Restoring Banking Stability (1999)
    Washington, D.C : The World Bank
    Details
    Language: English
    Pages: Online-Ressource (1 online resource (46 p.))
    Edition: Online-Ausg. World Bank E-Library Archive
    Parallel Title: Honohan, Patrick Beyond Capital Ideals
    Keywords: Bank ; Bank Failures ; Bankers ; Banking ; Banking Crises ; Banking Stability ; Banks ; Banks and Banking Reform ; Capital ; Capital Adequacy ; Capital Flows ; Debt Markets ; Economies ; Emerging Markets ; Emerging Markets ; Externalities ; Finance ; Finance and Financial Sector Development ; Financial Crises ; Financial Deepening ; Financial Literacy ; Financial Markets ; Financial Systems ; Inflation ; Infrastructure ; Private Sector Development ; Bank ; Bank Failures ; Bankers ; Banking ; Banking Crises ; Banking Stability ; Banks ; Banks and Banking Reform ; Capital ; Capital Adequacy ; Capital Flows ; Debt Markets ; Economies ; Emerging Markets ; Emerging Markets ; Externalities ; Finance ; Finance and Financial Sector Development ; Financial Crises ; Financial Deepening ; Financial Literacy ; Financial Markets ; Financial Systems ; Inflation ; Infrastructure ; Private Sector Development
    Abstract: Hard on the heels of Mexico's crisis in 1994, a wave of financial crises swept across emerging economies - from East Asia and Russia to Brazil - bringing the fragility of banking and finance into unprecedented focus. What has gone wrong? - Caprio and Honohan examine why emerging markets, in particular, are susceptible to and affected by financial difficulties. They show that these difficulties have a richer, more complex structure than they are sometimes believed to have - with marked information asymmetries and substantial volatility. The sources of heightened regulatory failure in emerging markets in recent years include the volatility of real and nominal shocks, the difficulty of operating in uncharted territory after financial liberalization and other changes in regime, and the political pressures that can inhibit the enforcement of prudential regulation. Caprio and Honohan discuss what stronger regulation can and cannot accomplish, as well as options to improve the incentive structure for bankers, regulators, and other market participants. They probe the shortcomings of a regulatory paradigm that relies mainly on supervised capital adequacy and discuss the possible intermittent application of supplementary blunt instruments as an interim solution while longer-term reforms are being put in place. Certain well-worn messages remain valid, but are respected more in theory than in practice. There would be fewer problems, the authors say, if there were: · More diversification. · More balanced financial structures (for example, as between debt and equity). · More foreign banks in emerging markets' financial systems. · Better enforcement of both contracts and regulations. Participants in the financial sector will constantly try to get around rules that limit their profitability, so regulation must be seen as an evolutionary struggle. Prevention of financial failure is not costless, and a heavy repressive hand is not warranted. But a richer regulatory palette can be used to protect financial systems more successfully against crisis while preserving the systems' growth-enhancing effectiveness. This paper is a joint product of Finance, Development Research Group, and the Financial Sector Practice Department. The authors may be contacted at gcaprioworldbank.org or phonohan@worldbank.org
    URL: Volltext  (Deutschlandweit zugänglich)
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    MPI Ethno. Forsch.
  • 2
    Online Resource
    Online Resource
    How Interest Rates Changed under Financial Liberalization : A Cross-Country Review (1999)
    Washington, D.C : The World Bank
    Details
    Language: English
    Pages: Online-Ressource (1 online resource (56 p.))
    Edition: Online-Ausg. World Bank E-Library Archive
    Parallel Title: Honohan, Patrick How Interest Rates Changed under Financial Liberalization
    Keywords: Asset Prices ; Bank Interest Rates ; Bank Lending ; Bank Spreads ; Borrowers ; Currencies and Exchange Rates ; Debt Markets ; Depos Developing Countries ; Developing Country ; Economic Theory and Research ; Emerging Markets ; Finance and Financial Sector Development ; Financial Liberalization ; Financial Literacy ; Insurance and Risk Mitigation ; Interest ; Interest Rate ; Interest Rates ; Lending ; Macroeconomic Management ; Macroeconomics and Economic Growth ; Market Interest Rates ; Money Market ; Private Sector Development ; Real Interest ; Real Interest Rates ; Treasury ; Treasury Bill ; Treasury Bill Rates ; Asset Prices ; Bank Interest Rates ; Bank Lending ; Bank Spreads ; Borrowers ; Currencies and Exchange Rates ; Debt Markets ; Depos Developing Countries ; Developing Country ; Economic Theory and Research ; Emerging Markets ; Finance and Financial Sector Development ; Financial Liberalization ; Financial Literacy ; Insurance and Risk Mitigation ; Interest ; Interest Rate ; Interest Rates ; Lending ; Macroeconomic Management ; Macroeconomics and Economic Growth ; Market Interest Rates ; Money Market ; Private Sector Development ; Real Interest ; Real Interest Rates ; Treasury ; Treasury Bill ; Treasury Bill Rates
    Abstract: April 2000 - As financial liberalization progressed, the general level of real interest rates increased more in developing countries than it did in industrial countries. Volatility in wholesale interest rates also jumped, often markedly, in most liberalizing countries. Treasury bill rates and bank spreads showed the greatest increase in developing countries, shifting substantial rents from the public sector and from favored borrowers. Financial liberalization was expected to make interest rates and asset prices more volatile, with distributional consequences such as reduced or relocated rents and increased competition in financial services. Honohan examines available data on money market and bank interest rates for evidence of whether these things happened. He shows that as more and more countries liberalized, the level and dynamic behavior of developing-country interest rates converged to industrial-country norms. In the short term, volatility increased in both real and nominal money market interest rates. Treasury bill rates and bank spreads, evidently the most repressed, showed the greatest increase as liberalization progressed - shifting substantial rents from the public sector and from favored borrowers. Whereas quoted bank spreads in industrial countries contracted somewhat in the late 1990s, spreads in developing countries remained much higher, presumably reflecting both market power and the higher risks of lending in the developing world. There was no clear-cut change in mean rates of inflation, monetary depth, or GDP growth. If anything, there was a small average improvement in inflation, but a decline in monetary depth and economic growth, relative to trends in industrial countries. This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to explore optimal policy under financial liberalization. The author may be contacted atphonohanworldbank.org
    URL: Volltext  (Deutschlandweit zugänglich)
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    MPI Ethno. Forsch.
  • 3
    Online Resource
    Online Resource
    Perverse Effects of a Ratings-Related Capital Adequacy System (1999)
    Washington, D.C : The World Bank
    Details
    Language: English
    Pages: Online-Ressource (1 online resource (20 p.))
    Edition: Online-Ausg. World Bank E-Library Archive
    Parallel Title: Honohan, Patrick Perverse Effects of a Ratings-Related Capital Adequacy System
    Keywords: Bank ; Bank Failure ; Bank Failures ; Banking Supervision ; Banks ; Banks and Banking Reform ; Capital ; Capital Adequacy ; Capital Requirement ; Capital Requirements ; Debt ; Debt Markets ; Deposit Insurance ; Deposits ; Emerging Markets ; Finance and Financial Sector Development ; Financial Literacy ; Interest ; Lending ; Loans ; Private Sector Development ; Projects ; Rating Agencies ; Risk ; Risk Factors ; Systemic Risk ; Bank ; Bank Failure ; Bank Failures ; Banking Supervision ; Banks ; Banks and Banking Reform ; Capital ; Capital Adequacy ; Capital Requirement ; Capital Requirements ; Debt ; Debt Markets ; Deposit Insurance ; Deposits ; Emerging Markets ; Finance and Financial Sector Development ; Financial Literacy ; Interest ; Lending ; Loans ; Private Sector Development ; Projects ; Rating Agencies ; Risk ; Risk Factors ; Systemic Risk
    Abstract: June 2000 - Allowing banks to hold less capital against loans to borrowers who have received a favorable rating by an approved rating agency may result in a rating system that neither reveals risk information about borrowers nor protects the deposit insurance fund. Part of the problem is the very idea of basing portfolio risk evaluation on the sum of individual loan risks, but there are also important incentive issues. It has recently been proposed that banks be allowed to hold less capital against loans to borrowers who have received a favorable rating by an approved rating agency. But a plausible model of rating-agency behavior shows that this strategy could have perverse results, actually increasing the risk of deposit insurance outlays. First, there is an issue of signaling, with low-ability borrowers possibly altering their behavior to secure a lower capital requirement for their borrowing. Second, establishing a regulatory cut-off may actually reduce the amount of risk information made available by raters. Besides, the credibility of rating agencies may not be damaged by neglect of the risk of unusual systemic shocks, although deposit insurers greatest outlays come chiefly at times of systemic crisis. And using agencies' individual ratings is unlikely to be an effective early-warning system for the risk of systemic failure, so use of the ratings could lull policymakers into a false sense of security. It is important to harness market information to improve bank safety (for example, by increasing the role of large, well-informed, but uninsured claimants), but this particular approach could be counterproductive. Relying on ratings could induce borrowers to increase their exposure to systemic risk even if they reduce exposure to specific risk. This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to examine the effects of financial sector regulation. The author may be contacted at phonohanworldbank.org
    URL: Volltext  (Deutschlandweit zugänglich)
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    MPI Ethno. Forsch.
  • 4
    Online Resource
    Online Resource
    Fiscal Contingency Planning for Banking Crises (1999)
    Washington, D.C : The World Bank
    Details
    Language: English
    Pages: Online-Ressource (1 online resource (40 p.))
    Edition: Online-Ausg. World Bank E-Library Archive
    Parallel Title: Honohan, Patrick Fiscal Contingency Planning for Banking Crises
    Keywords: Accounting ; Balance Sheet ; Banking Crises ; Banks and Banking Reform ; Budget ; Contingency Planning ; Conversion ; Debt Markets ; Depositors ; Emerging Markets ; Expenditure ; Expenditures ; Finance and Financial Sector Development ; Financial Instruments ; Financial Literacy ; Fiscal Authorities ; Fiscal Policy ; Future ; Liabilities ; Liability ; Monetary Authorities ; Moral Hazard ; Private Sector Development ; Revenue ; Tax ; Tax Rates ; Accounting ; Balance Sheet ; Banking Crises ; Banks and Banking Reform ; Budget ; Contingency Planning ; Conversion ; Debt Markets ; Depositors ; Emerging Markets ; Expenditure ; Expenditures ; Finance and Financial Sector Development ; Financial Instruments ; Financial Literacy ; Fiscal Authorities ; Fiscal Policy ; Future ; Liabilities ; Liability ; Monetary Authorities ; Moral Hazard ; Private Sector Development ; Revenue ; Tax ; Tax Rates
    Abstract: November 1999 - Estimating the likely fiscal costs of future banking crises requires information about the size and composition of the banks' balance sheets and expert assessments about the accuracy of the accounting data and about certain short-term risks. There is constant demand for an estimate of the likely fiscal costs of future banking crises, but little precision can be expected in such an estimate. Honohan shows how information that is typically available to authorities could be used to get a general sense of the order of magnitude of the direct fiscal liability. What is required for such an estimate? · Information about the size and composition of the banks' balance sheets. · Expert assessments of the accuracy of the accounting data and of specific short-term risks to which the components are known to be subject. Honohan's method distinguishes between losses that have already crystallized and the changing risks for the immediate future. By including contingency planning for banking collapse in their fiscal calculations, authorities may risk destabilizing expectations or worsening the moral hazard in the system. But the risks of contingency planning generally outweigh the risks of sending confused signals. Insisting on ignorance is a poor way to protect against announcement errors that trigger panic. This paper - a product of Finance, Development Research Group - was produced for the Poverty Reduction and Economic Management Network thematic group studying the quality of fiscal adjustment. The author may be contacted at phonohanworldbank.org
    URL: Volltext  (Deutschlandweit zugänglich)
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    MPI Ethno. Forsch.
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