IEG review of World Bank assistance for financial sector reform / World Bank Independent Evaluation Group.

Format:

Book

Government document

Contributor:

Effron, Laurie.

Language:

English

Subjects (All):

Banks and banking--Developing countries.

Banks and banking.

Financial institutions.

Management.

Developing countries.

Financial institutions--Developing countries--Management.

World Bank.

Physical Description:

xxiii, 139 pages : illustrations ; 28 cm

Place of Publication:

Washington, D.C. : World Bank, 2006.

Summary:

This evaluation presents an independent assessment of the Bank's support for financial sector reforms over the period FY93-03. It assesses the extent to which the objectives of Bank assistance were achieved, including reducing government ownership of financial intermediaries, decreased market concentration, increased competition and efficiency, healthier and more stable financial intermediaries, and deeper, more developed financial systems. It also examines Bank support for financial sector reforms in countries under crisis.

Contents:

Objectives of the Review 1

Caveats on the Scope of Review 2

Inputs 2

Organization of the Review 2

2 What Constitutes Good Practice? 5

Historical Perspective 5

Literature Review 5

Bank Guidelines and Strategies 8

Past IEG Recommendations and Management Response 10

Framework for Evaluation 10

Part I Assessing Bank Assistance 13

3 Trends in Lending and Nonlending 15

Bank Lending for Financial Sector Reforms 16

Focus of Financial Sector Reforms 18

Bank Nonlending Assistance for Financial Sector Reforms 20

4 Regional Patterns of Bank Assistance 21

Europe and Central Asia (ECA) Region Was the Most Active 22

Africa (AFR) and Latin America and the Caribbean (LAC) Regions Were Early Reformers 22

East Asia and Pacific (EAP) Region Was Mostly Crisis Driven 24

Middle East and North Africa (MNA) and South Asia (SAR) Regions Took Conservative Approaches 24

5 Quality-at-Entry of Bank Assistance 27

Quality-at-Entry in Lending 27

Quality of Nonlending Services 29

Consistency of Bank Approaches within Countries 30

Coherence of Bank Approaches across Countries 30

6 Outcomes of Bank Loans and Credits 33

Financial Sector versus Multisector Loans 33

Trends and Sequencing of Adjustment Loans 36

7 Bank Support to Crisis Countries 39

Did the Bank Anticipate the Crisis? 40

Bank Response to Crises 42

Objectives and Designing Loans 43

Below-Average Achievement 44

Collaboration with the IMF 47

Effectiveness and Sustainability of the Bank's Crisis Unit 48

Bank Leadership during Crisis 48

Recommendations 49

Part II Analyzing Results at the Country Level 51

8 Country-Level Outputs: Ownership 53

Shift to Private Ownership 53

Considerable Progress Has Been Made 53

Privatization Far from Complete in Many Countries 55

Quality Matters 56

Better Outcomes with Prior Financial Restructuring 57

Other Forms of Bank Restructuring 58

Avoiding Buildup of NPLs 59

Closure as an Alternative to Bank Privatization 59

Privatization Took Longer Than Expected 59

Unanticipated Problems 60

Restructuring without Privatization Is Seldom Successful 60

Recommendations on Restructuring and Privatizing Banks 61

9 Country-Level Outputs: Incentives 63

Changes in the Regulatory Regime Present a Mixed Picture 63

Regulatory Framework in ECA Region Transition Countries 64

Implementing Regulations and Better Banking Supervision 65

Special Topic: Legal Immunity for Supervisors 66

Special Topic: Deposit Insurance 66

Recommendations on Improving the Incentive Framework 66

10 Country-Level Outcomes: Market Structure, Contestability, Efficiency, and Health 67

Changes in Market Structure: Bank Concentration 67

Changes in Contestability 68

Interest Rate Spread 70

Health of the Financial System 72

11 Country-Level Impact: Financial Sector Depth and Stability 75

Financial Sector Depth: Positive Findings 75

Systems Still Shallow in Many Countries 77

Credit to the Private Sector 77

Financial Sector Depth: Capital Markets 79

Did Bank Borrowing Improve Stability? 79

12 Findings and Recommendations 83

Findings 83

Recommendations 86

A Data on Trends in Lending and Nonlending 91

B Outcome Ratings of Bank Loans 99

C Country-Level Outputs 103

D Reference Tables 107

E Country-Level Outcomes 109

F Definitions and Sources for IEG/DEC Model 113

G Management Response 117

H Chairman's Summary, Committee on Development Effectiveness (CODE) 125

3.1 Identifying Bank Assistance for the Financial Sector 17

3.2 Financial Sector Assessment Program (FSAP) 20

4.1 Financial Sector Reforms in the ECA Region: Bank Strategy, Analysis, and Lending 23

4.2 Bank Assistance to China 24

4.3 Pakistan and Bangladesh: Commitments Explain Differences in Bank Lending 25

5.1 Highly Relevant Objectives for Financial Sector Reforms 28

5.2 Strong Consistency among Bank Products 30

6.1 What a Difference a (Near) Crisis (Sometimes) Makes 37

7.1 Objectives of Crisis Lending: Ambitious Reforms 45

7.2 Mixed Outcomes 46

7.3 Improved Coordination Needed between the World Bank and the IMF 47

8.1 Problems Comparing Results among Countries 54

8.2 Data on Bank Ownership Can Be Misleading 56

8.3 Quality of the Buyer Matters 57.

Notes:

"This evaluation was written by Laurie Effron ..."--P. ix.

Includes bibliographical references (pages 135-139).

ISBN:

0821363050

OCLC:

60856233

Publisher Number:

9780821363058