Competition in the financial sector, as in other sectors, matters for allocative, productive, and dynamic efficiency. Theory suggests, however, that unfettered competition is not necessarily best given the special features of financial services. The author discusses these analytical...

The literature shows that good corporate governance generally pays--for firms, for markets, and for countries. It is associated with a lower cost of capital, higher returns on equity, greater efficiency, and more favorable treatment of all stakeholders, although the direction of causality is not...

More than regulations, laws on the books, or voluntary codes, enforcement is key to creating an effective business environment and good corporate governance, at least in developing countries and transition economies. A framework is presented to help explain enforcement, the impact on corporate...

Much of the current debate on reforming the international financial architecture is aimed at reducing the risks of contagion--best defined as a significant increase in cross-market linkages after a shock to an individual country (or group of countries). This definition highlights the importance...

The sharp decline in the once-stellar performance of East Asian corporations following the 1997 financial crisis has sparked an intense debate. Some observers argue that external shocks, including a drop in aggregate demand and a shortage of working capital, explain the corporate sector's poor...

This article reviews the evidence on the importance of finance for economic well-being. It provides data on the use of basic financial services by households and firms across a sample of countries, assesses the desirability of universal access, and provides an overview of the macroeconomic,...