There is constant demand for an estimate of the likely fiscal costs of future banking crises, but little precision can be expected in such an estimate. The author shows how information that is typically available to authorities could be used to get a general sense of the order of magnitude of...

Enthusiasts for financial sector tax reform typically come either with some form of"flat tax"(including value added tax on financial services, zero taxation on capital income, or a universal transactions tax) or advocating corrective taxes designed to offset market failures or achieve other...

The CFA or franc zone in Africa is the largest and most enduring of currency blocs. This paper is designed as a guide to understanding how the zone works as a mechanism for monetary cooperation. Unfortunately, the experience described in this paper is not encouraging. Despite fixed exchange...

In recent decades, a majority of countries have experienced a systemic banking crisis requiring a major-and expensive-overhaul of their banking system. Not only do banking crises hit the budget with outlays that must be absorbed by higher taxes (or spending cuts), but they are costly in terms of...

It has recently been proposed that banks be allowed to hold less capital against loans to borrowers who have received a favorable rating by an approved rating agency. But a plausible model of rating-agency behavior shows that this strategy could have perverse results, actually increasing the...

The authors question the widespread belief that market discipline on banks cannot be effective in less developed financial environments. There is no systematic tendency for low-income countries to lack the prerequisites for market discipline. Offsetting factors to the weaker market and formal...

The recent Thai boom has been accomplished in an economy with considerable openness to external forces. Despite the fiscal correction achieved during 1986-89, the domestic demand expansion has made itself felt in a widening of the current account deficit. While this deficit partly reflects the...

De Nicol? Honohan, and Ize assess the benefits and risks associated with dollarization of the banking system. The authors provide novel empirical evidence on the determinants of dollarization, its role in promoting financial development, and on whether dollarization is associated with financial...

The term"excess liquidity"may refer to the share of liquid assets in bank portfolios (the result of a retrenchment in bank lending, or a"credit crunch") or to money holdings of the nonbank public. Excess liquidity may be voluntary or nonvoluntary. In response to excess liquidity, policymakers...

In developing countries, the evolution of financial markets and growing disenchantment with directed credit programs and bank-by-bank credit ceilings have increased the interest in examining and moving to indirect methods of implementing monetary policy. The authors provide an overview of the...