Banking Sector Reforms: Recovery Prospects and Policy Issues
Adhikari, Ramesh; Oh, Soo-Nam | November 1999
Abstract
The importance of banks is premised on the ground that banks are the main channels of savings and the allocators of credit in an economy. The efficiency of banks therefore affects the financial system and the entire economy. Their failures can erode public wealth and confidence in the economy. Bank failures or sys¬temic banking crises occur almost invariably due to distorted management incentives, bad governance, weaknesses in macroeco-nomic policies, weak supervision, problems in the real sector, or a combination of these.
Banking failure cuts both ways. It can be the cause of macro-economic instability, particularly when it contributes to fiscal deficits and also when it drains foreign exchange reserves. On the other hand, macroeconomic instability can cause banking failure as a result of, for example, currency devaluation, rise in interest rates, and fall in asset prices leading to corporate losses and insolvency. In addition, lack of market discipline or sufficient competition, proper regulation and oversight, and weak legal framework and en-forcement are other possible factors contributing to structural weaknesses in the banking system.
Citation
Adhikari, Ramesh; Oh, Soo-Nam. 1999. Banking Sector Reforms: Recovery Prospects and Policy Issues. © Asian Development Bank. http://hdl.handle.net/11540/2612. License: CC BY 3.0 IGO.Keywords
Urban Development Finance
Trade Finance
Small Business Finance
Rural Finance
Roundtable on International Trade and Finance
Regional Development Finance
Public Service Finance
Public Finance
Project Finance
Private Finance
Nonbank Financing
Non-Bank Financial Institutions
Municipal Finance
Local Government Finance
Local Currency Financing
Limited Resource Financing
International Financial Institutions
Infrastructure Financing
Industrial Finance
Government Financial Institutions
Government Finance
Financing of Infrastructure
Financial Sector Development
Financial Regulation
Taxation
Public Accounting
National Budget
Municipal Bonds
Local Government
Local Taxes
International Monetary Relations
International Financial Market
International Banking
Central Banks
Business Financing
Capital Resources
Budgetary Policy
Capital Needs
Corporate Divestiture
Capital Instruments
Pension Funds
Insurance Companies
Banks
Portfolio Management
Fiscal Administration
Economics of Education
Development Banks
Use tax
Taxing power
State of taxation
Tax-sales
Tax revenue estimating
Tax planning
Spendings tax
Special assessments
Tax administration and procedure
Sales tax
Real property and taxation
Progressive taxation
Effect of taxation on land use
Effect of taxation on labor supply
Intergovernmental tax relations
Inheritance and transfer tax
Energy tax
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