Intro -- Contents -- I. INTRODUCTION -- II. A MODEL OF GLOBALIZATION HAZARD AND PRICE GUARANTEES -- III. CHARACTERIZING THE GLOBALIZATION HAZARD-MORAL HAZARD TRADEOFF -- IV. QUANTITATIVE ANALYSIS -- V. NORMATIVE IMPLICATIONS AND SENSITIVITY ANALYSIS -- VI. CONCLUSIONS -- REFERENCES.

In episodes of significant banking distress or perceived systemic risk to the financial system, policymakers have often opted for issuing blanket guarantees on bank liabilities to stop or avoid widespread bank runs. In theory, blanket guarantees can prevent bank runs if they are credible....

This paper links the current sub-prime mortgage crisis to a decline in lending standards associated with the rapid expansion of this market. We show that lending standards declined more in areas that experienced larger credit booms and house price increases. We also find that the underlying...

We present a framework that clarifies the financial role of the IMF, the rationale for conditionality, and the conditions under which IMF-induced moral hazard can arise. In the model, traditional conditionality commits country authorities to undertake crisis resolution efforts, facilitating the...

This paper links the current sub-prime mortgage crisis to a decline in lending standards associated with the rapid expansion of this market. We show that lending standards declined more in areas that experienced larger credit booms and house price increases. We also find that the underlying...

Large fiscal financing needs, both in advanced and emerging market economies, have often been met by borrowing heavily from domestic banks. As public debt approached sustainability limits in a number of countries, however, high bank exposure to sovereign risk created a fragile inter-dependence...

Against the background of Mexico's persistently high degree of inequality, this paper analyzes the country's experience with pro-poor policies over the last decade. A number of important government initiatives, implemented since the mid-1990s, have aimed at improving distributional equity...

The paper analyses the cost and effectiveness of bank restructuring policies in 11 transition countries during 1991-98. It argues that country-specific banking sector features, the size of bad loans inherited from the centrally planned system, and weaknesses in the restructuring policies...

The new international financial architecture can help African countries benefit from globalization, while minimizing the risks, and foster an environment conducive to increased domestic investment and higher sustained growth. This paper highlights the progress that African countries have made in...

Drawing from a unique data set comprising 2,893 banks and 152 countries over the period 1987 to 2000, we test whether the adoption of the Basel Accord by Latin American and Caribbean countries was responsible for the serious slowdowns in credit growth experienced by these countries. We find...