Developing countries are trying to develop long-term financial markets and institutional investors are expected to play a key role. This paper uses unique evidence on the universe of institutional investors from the leading case of Chile to study to what extent mutual funds, pension funds, and insurance companies hold and bid for long-term instruments, and which factors affect their choices.
... See More + The paper uses monthly asset-level portfolios to show that, despite the expectations, mutual and pension funds invest mostly in short-term assets relative to insurance companies. The significant difference across maturity structures is not driven by the supply side of debt or tactical behavior. Instead, it seems to be explained by manager incentives (related to short-run monitoring and the liability structure) that, combined with risk factors, tilt portfolios toward short-term instruments, even when long-term investing yields higher returns. Thus, the expansion of large institutional investors does not necessarily imply longer-term markets.
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Policy Research Working Paper WPS6922 JUN 01, 2014
Opazo, Luis; Raddatz, Claudio; Schmukler, Sergio L.
This paper provides a comprehensive, global database of deposit insurance arrangements as of 2013. The authors extend their earlier dataset by including recent adopters of deposit insurance and information on the use of government guarantees on banks' assets and liabilities, including during the recent global financial crisis.
... See More + They also create a Safety Net Index capturing the generosity of the deposit insurance scheme and government guarantees on banks' balance sheets. The data show that deposit insurance has become more widespread and more extensive in coverage since the global financial crisis, which also triggered a temporary increase in the government protection of non-deposit liabilities and bank assets. In most cases, these guarantees have since been formally removed but coverage of deposit insurance remains above pre-crisis levels, raising concerns about implicit coverage and moral hazard going forward.
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Policy Research Working Paper WPS6934 JUN 01, 2014
Some of the headings included in this issue of the Development Economics Prospects Group (DECPG) daily economics and financial market commentary newsletter are as follows: financial markets; high-income economies; and developing economies in East Asia and Pacific, Middle East and North Africa, and Sub-Saharan Africa.
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Some of the headings included in this issue of the Development Economics Prospects Group (DECPG) daily economics and financial market commentary newsletter are as follows: financial markets; high-income economies; and developing economies in East Asia and Pacific, and Sub-Saharan Africa.
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The objective of the Deposit Insurance Strengthening Project for Serbia is to strengthen the financial and institutional capacity of the Deposit Insurance Agency (DIA), so as to enable it to meet its deposit insurance and bank resolution obligations and serve as a core part of financial sector safety net.
... See More + The project consists of two components: 1) strengthen the financial capacity of the DIA; and 2) strengthen the institutional capacity of the DIA. The first component aims to finance the Deposit Insurance Fund (DIF) to meet productive use requirements as financing for a deposit insurance scheme helps increase confidence in the financial system. The second component will finance technical assistance (TA) in critical areas that are needed to achieve the Disbursement Linked Indicators (DLIs). Technical assistance includes governance, information sharing between safety net providers, recoveries, and oversight of state-owned banks.
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This paper provides new evidence on the factors affecting protracted credit contraction in the wake of the global financial crisis. The paper applies panel vector autoregressions to a global panel that consists of quarterly data for 41 countries for the period 2000-2011 and documents that domestic private credit growth is highly sensitive to cross-border funding shocks around the world.
... See More + This relationship is significantly stronger in Central and Eastern Europe, a region with considerably stronger foreign presence, higher cross-border funding, and elevated loan-to-deposit ratios compared with the rest of the world. The paper shows that high foreign ownership per se does not appear to explain credit response differences to foreign funding shocks. Rather, there is a stronger response in countries that exhibit high loan-to-deposit ratios and a high reliance on foreign funding relative to local deposits. The results suggest that funding model differences were at the heart of the post-crisis credit contraction in several Central and Eastern European countries. These findings have important regulatory and supervisory implications for emerging countries in Central and Eastern Europe as well as for other countries.
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Policy Research Working Paper WPS6783 FEB 01, 2014
This assessment of compliance with the core principles for effective deposit insurance systems (core principles) was conducted as a part of the Financial Sector Assessment Program (FSAP) performed by the International Monetary Fund and the World Bank at the request of the Albanian government.
... See More + This assessment was conducted by Claire McGuire, Senior Financial Sector Specialist with the World Bank, during a mission to Albania from October 28th to November 11th, 2013. The assessment was based on a review of relevant laws, regulations and regulatory and supervisory practices related to the banking sector and the operations of ADIA. Multiple meetings were held with various employees of the Bank of Albania (BOA), Ministry of Finance (MOF), the Banker's Association, the two savings and credit associations, and ADIA. ADIA completed a self-assessment in preparation for the FSAP.
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Financial Sector Assessment Program (FSAP) 89245 FEB 01, 2014
This report addresses the insolvency of natural persons following this structure: a first part introduces the objectives and nature of the report, deals with general issues, and describes the foundations of a system for the treatment of the insolvency of natural persons.
... See More + The second part of the report analyzes the core legal attributes of system for the treatment of the insolvency of natural persons: within this system, the most relevant questions are analyzed in depth, namely the design of the system and the institutional framework, access to the system, the participation of creditors, the solutions to the insolvency process, and discharge. The main objective of this report is to provide guidance on the characteristics of an effective insolvency regime for natural persons and on the opportunities and challenges encountered in the development of such a regime. In this regard, the report raises awareness about the importance of a regime for the treatment of the insolvency of natural persons, and explores the advantages and disadvantages of the solutions to the numerous practical issues that have to be confronted in the design of an insolvency regime for natural persons.
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International Debt Statistics (IDS) 2014 presents data and analytical information on the external debt of developing countries for 2012, based on actual flows and debt-related transactions reported to the World Bank Debtor Reporting System (DRS) by 124 developing countries.
... See More + It provides users with comprehensive stock and flow data on the external debt of individual developing countries and for regional and analytical groupings. In addition, IDS showcases the broader spectrum of debt data collected and compiled by the World Bank. These include the high frequency, quarterly data for high-income and selected developing countries reporting to the joint World Bank - International Monetary Fund (IMF) Quarterly External Debt Statistics (QEDS), and the Public Sector Debt (PSD) database launched in 2010. In common with the DRS, these databases promote consistency and comparability across countries through standard definitions and valuation methods. IDS also include a summary analysis of aggregate net capital flows (debt and equity) in 2012.
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The standard macro(prudential) models focus on externalities and treat all prudential instruments as alternative, but equivalent, forms of Pigouvian taxes.
... See More + This paper explicitly models individual banks' risk choices and shows that different prudential instruments affect banks' risk-taking incentives differently. Thus, conflicts may arise between the micro and macro prudential stance.
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Policy Research Working Paper WPS6721 DEC 01, 2013