The literature on safety nets has become technically more precise by drawing on advances in contract theory and optimal governance structure. This paper begins with a treatment of some aspects of the theory. The author's approach draws more on institutional economics, and more precisely on the...

The authors study the impact of bank concentration, regulations, and national institutions on the likelihood of suffering a systemic banking crisis. Using data on 79 countries over the period 1980-97, they find that crises are less likely (1) in more concentrated banking systems, (2) in...

The author explains how differences in the informational and contracting environments of countries affect the optimal design of their financial safety nets and their optimal strategies for managing financial crises. He explains how to design and operate safety nets at minimum cost to taxpayers...

The authors show that systemic risk exerts a significant impact on the behavior of depositors, sometimes overshadowing their responses to standard bank fundamentals. Systemic risk can affect market discipline both regardless of and through bank fundamentals. First, worsening systemic conditions...

This paper proposes a framework for analyzing the evolution of financial sectors in economies transiting from command to market structures. Most commentators have tended to regard this"Transition"as an undifferentiated period to be traversed as rapidly as possible. In doing so they ignore the...

The notion of free banking is at least as difficult to define as the notion of central banking. The author focuses on a relatively unregulated banking system that operated in Scotland in the eighteenth and nineteenth centuries. He argues that a relatively unregulated system is a wise option for...

The authors explore how a multivariate logit empirical model of banking crisis probabilities can be used to monitor fragility in the banking sector. The proposed approach relies on readily available data, and the fragility assessment has a clear interpretation based on in-sample statistics....

Drawing on earlier work, the author reviews some of the salient facts about the boom in banking busts in developing countries. He then reviews policy responses taken by authorities in some of the"early"crisis countries, and considers a wider menu of responses -in particular the currently popular...

Using bank data for 80 countries for 1988-95, the authors show that differences in interest margins and bank profitability reflect various determinants: bank characteristics, macroeconomic conditions, explicit and implicit bank taxes, regulation of deposit insurance, general financial structure,...

Banking sectors in transition economies have experienced major transformations throughout the 1990s. While some countries have been successful in eliminating underlying distortions and restructuring their financial sectors, in some cases financial sectors remain underdeveloped and the rates of...