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...

The authors review the case for market-based debt reduction and concerted debt reduction. They explain the new menu-based approach to debt reduction and discuss why it may be preferred to market-based and concerted debt reduction. In a review of the five recent debt-reduction agreements, they...

The Brady Initiative has introduced official support for debt reduction. This new phase in the debt strategy requires a new set of tools to analyze debt deals and to study the impact of a deal on the debtor country. This paper discusses first the methodological issues involved in evaluating the...

Interest rates fell sharply after Mexico's Brady deal, and private investment and growth recovered. The authors show that the main benefit of debt relief was not to lower expected payments but to reduce uncertainty. Reduced uncertainty was found to be the dominant factor in explaining the...

The increased volatility of exchange rates, interest rates and goods prices has focused fresh attention on the importance for developing countries of reducing their risks in these markets. Although, these countries generally cannotuse such conventional hedging instruments as currency and...

Financial intermediation and financial services industries have undergone many changes in the past two decades due to deregulation, globalization, and technological advances. The framework for regulating finance has seen many changes as well, with approaches adapting to new issues arising in...

Using bank-level data, the authors apply the Panzar and Rosse (1987) methodology to estimate the extent to which changes in input prices are reflected in revenues earned by specific banks in 50 countries'banking systems. They then relate this competitiveness measure to indicators of...

Changes in exchange rates affect both the level and the structure of a country's external debt. Indonesia's debt service increased from 10 percent in 1980 to 37 percent in 1986, largely because of the depreciation of the U.S. dollar and the fall in oil prices. Developed countries can hedge...

The development of government bond markets and, in particular, their currency composition have recently received much interest, partly because of their relation with financial crises. The authors study the determinants of the size and currency composition of government bond markets for a panel...

East Asia's financial crisis has been attributed in part to the weak performance and risky financial structures of Asian corporations. In the period before Asia's financial crisis, however, analysts were not suggesting that the financial structure of many East Asian corporations would be unable...