We explore the impact of sophistication in risk management as required by Basel II on banking stability and market conditions. We compare a competitive banking system in which only average ratings are available with a competitive system in which banks are able to assess the default risk of...

We investigate the question of whether sophistication in risk management fosters banking stability. We compare a simple banking system in which an average rating is used with a sophisticated banking system in which banks are able to assess the default risk of entrepreneurs individually. Both...

Based on five case studies, this paper looks at the definition and classification of fiscal risks; sets out the components of a comprehensive fiscal risks framework; and examines how to operationalise such a framework. It then summarises challenges and key lessons to be considered by countries...