Advanced Search
MyIDEAS: Login

Banking reform in transition countries

Contents:

Author Info

  • Claessens, Stijn

Abstract

In reforming the financial sector in transition economies, one important debate is whether governments should try to reform existing state-owned banks (the rehabilitation approach) or whether a new private banking system should be allowed to emerge (a new entry approach). Or should there be a mix of the two approaches, in which the state bank activities are restricted while a parallel private banking system develops? The authors'cross-country comparison of banks'institutional development in 25 transitional economies suggests that progress can be faster under the new entry approach, especiallyrelative to initial conditions. Progress under the rehabilitation approach appears to be inhibited by poor incentives. In most countries, even those with a good banking infrastructure and a large segment of good banks, a two track process has evolved, with differences between weak and strong banks. Weak banks have moved little beyond central planning. Regression estimates suggest that slow progress of weak banks is associated with: cover concentration, government preferential treatment, and limited new banks entry. The causality direction is often unclear. Policies and structural conditions can affect bank quality. The role of banks will remain limited in many transition economies due to weak legal infrastructures, much uncertainty and inside information, and problems associated with highly leveraged financial intermediaries - including fraud, political interference, and implicit guarantees. In the short run, self-finance and intermediation among enterprises and through nonbank financial institutions may prevail.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1996/08/01/000009265_3961019225429/Rendered/PDF/multi_page.pdf
Download Restriction: no

Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1642.

as in new window
Length:
Date of creation: 31 Aug 1996
Date of revision:
Handle: RePEc:wbk:wbrwps:1642

Contact details of provider:
Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
Email:
Web page: http://www.worldbank.org/
More information through EDIRC

Related research

Keywords: Financial Intermediation; Banks&Banking Reform; Payment Systems&Infrastructure; Financial Crisis Management&Restructuring; Municipal Financial Management; Banks&Banking Reform; Financial Intermediation; Financial Crisis Management&Restructuring; Municipal Financial Management; Settlement of Investment Disputes;

Other versions of this item:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Caprio, Gerard Jr. & Summers, Lawrence H., 1993. "Finance and its reform : beyond laissez-faire," Policy Research Working Paper Series 1171, The World Bank.
  2. Ronald I. McKinnon, 1991. "Financial Control in the Transition from Classical Socialism to a Market Economy," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 107-122, Fall.
  3. Dimsdale, Nicholas & Prevezer, Martha (ed.), 1994. "Capital Markets and Corporate Governance," OUP Catalogue, Oxford University Press, number 9780198287889.
  4. Demirguc-Kunt, Ash & Levine, Ross, 1996. "Stock Market Development and Financial Intermediaries: Stylized Facts," World Bank Economic Review, World Bank Group, vol. 10(2), pages 291-321, May.
  5. Gerard Caprio, Jr., 1995. "The role of financial intermediaries in transitional economies," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 42(1), pages 257-302, June.
  6. Allen, Franklin & Gale, Douglas, 1995. "A welfare comparison of intermediaries and financial markets in Germany and the US," European Economic Review, Elsevier, vol. 39(2), pages 179-209, February.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Montes-Negret, Fernando & Papi, Luca, 1997. "The Polish experience with bank and enterprise restructuring," Policy Research Working Paper Series 1705, The World Bank.
  2. Park, Albert & Brandt, Loren & Giles, John, 2003. "Competition under credit rationing: theory and evidence from rural China," Journal of Development Economics, Elsevier, vol. 71(2), pages 463-495, August.
  3. Patrick Honohan, 1998. "Diagnosing Banking System Failures in Developing Countries," Papers WP093, Economic and Social Research Institute (ESRI).
  4. Fleming, Alex & Lily Chu & Bakker, Marie-Renee, 1996. "The Baltics - Banking crises observed," Policy Research Working Paper Series 1647, The World Bank.
  5. David A Grigorian & Vlad Manole, 2006. "Determinants of Commercial Bank Performance in Transition: An Application of Data Envelopment Analysis," Comparative Economic Studies, Palgrave Macmillan, vol. 48(3), pages 497-522, September.
  6. Giovanni Ferri, 2008. "Banking In China: Are New Tigers Supplanting the Mammoths?," Working Papers 052008, Hong Kong Institute for Monetary Research.
  7. Ferri, Giovanni, 2009. "Are New Tigers supplanting Old Mammoths in China's banking system? Evidence from a sample of city commercial banks," Journal of Banking & Finance, Elsevier, vol. 33(1), pages 131-140, January.
  8. Lino Sau, 2012. "Evolution of China's financial system and its impact on economic development," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 5(1), pages 1-15.
  9. Delis, Manthos D & Staikouras, Panagiotis, 2009. "On-site audits, sanctions, and bank risk-taking: An empirical overture towards a novel regulatory and supervisory philosophy," MPRA Paper 16836, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1642. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.