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Financial Sector Conditionality; Is Tougher Better?


  • Roger P. Kronenberg
  • Alessandro Giustiniani


The aim of this paper is to take a closer look at IMF conditionality in the banking sector. Our analysis shows that while such conditionality became more stringent following the Asian crisis, compliance has remained broadly unchanged, comparing unfavorably with other structural reforms. The results of panel data regressions show that while compliance with IMF-supported banking sector reform strategies has contributed to an improvement in banking sector performance, increases in the hardness and intensity of IMF conditionality may not be, ceteris paribus, effective. The policy implication is that the IMF should, therefore, continue its efforts in enhancing countries' ownership and streamlining conditionality.

Suggested Citation

  • Roger P. Kronenberg & Alessandro Giustiniani, 2005. "Financial Sector Conditionality; Is Tougher Better?," IMF Working Papers 05/230, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:05/230

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    References listed on IDEAS

    1. Ariel BUIRA, 2003. "An Analysis Of Imf Conditionality," G-24 Discussion Papers 22, United Nations Conference on Trade and Development.
    2. Marc G Quintyn & David S. Hoelscher, 2003. "Managing Systemic Banking Crises," IMF Occasional Papers 224, International Monetary Fund.
    3. Morris Goldstein & Timothy F. Geithner & Paul Keating & Yung Chul Park, 2003. "IMF Structural Programs," NBER Chapters,in: Economic and Financial Crises in Emerging Market Economies, pages 363-458 National Bureau of Economic Research, Inc.
    4. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier.
    5. Charalambos Christofides & Atish R. Ghosh & Uma Ramakrishnan & Alun H. Thomas & Laura Papi & Juan Zalduendo & Jun I Kim, 2005. "The Design of IMF-Supported Programs," IMF Occasional Papers 241, International Monetary Fund.
    6. Walter B. Wriston, 1998. "Dumb Networks and Smart Capital," Cato Journal, Cato Journal, Cato Institute, vol. 17(3), Winter.
    7. Alex Mourmouras & Anna Ivanova & George C. Anayotos & Wolfgang Mayer, 2003. "What Determines the Implementation of IMF-Supported Programs?," IMF Working Papers 03/8, International Monetary Fund.
    8. Charles W. Calomiris, 1998. "The IMF's Imprudent Role As Lender of Last Resort," Cato Journal, Cato Journal, Cato Institute, vol. 17(3), pages 275-294, Winter.
    9. James M. Boughton, 2003. "Who's in Charge? Ownership and Conditionality in IMF-Supported Programs," IMF Working Papers 03/191, International Monetary Fund.
    10. Stefan N Ingves & Steven A. Seelig & Dong He, 2004. "Issues in the Establishment of Asset Management Companies," IMF Policy Discussion Papers 04/3, International Monetary Fund.
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    Cited by:

    1. Thomas Barnebeck Andersen & Sam Jones & Finn Tarp, 2012. "The Finance–Growth Thesis: A Sceptical Assessment-super- †," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 21(suppl_1), pages -88, January.
    2. Pasali, Selahattin Selsah, 2013. "Where is the cheese ? synthesizing a giant literature on causes and consequences of financial sector development," Policy Research Working Paper Series 6655, The World Bank.

    More about this item


    Conditionality; Fund; financial sectors; banking; banking sector; structural conditionality; banking sector reform; International Monetary Arrangements and Institutions; Financial Economics;

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