Before the late 1970s, U.S. savings and loan institutions (S&Ls) were primarily mutually-owned institutions with limited management capabilities, limited investment options, and virtually unlimited interest rate exposure. The industry was closely tied to real estate so conflicts of interest and...

This paper studies the significance of social innovations - in particular, financial and fiscal innovations. Financial innovations tend to reduce transaction costs and risk, and as a result bring about widening, deepening and integration of capital markets. Such financial development accelerates...

Financial market instability has been the focus of attention of both academic and policy circles. Rating agencies have been under particular scrutiny lately as promoters of financial excesses, upgrading countries in good times and downgrading them in bad times. Using a panel of emerging...

Faced with weak sub-national finances that pose a risk to macroeconomic stability, Mexico's federal government in April 2000 established an innovative incentive framework to bring fiscal discipline to state and municipal governments. That framework is based on two pillars: an explicit...

The authors offer evidence that U.S. interest rate policy has an important influence in the determination of credit spreads on emerging market bonds over U.S. benchmark treasuries and therefore on their cost of capital. Their analysis improves on the existing literature and understanding by...

Can developing countries affect the variance of real imports solely by altering the way debt service is paid? The answer, says the author, is a qualified yes. The presumption that fixed rate debt is less risky than flexible rate debt is historically inaccurate as a general proposition. Using...

The authors analyze some aspects of the market for Brady bonds (restructured debt in developing countries). They focus on how the debt crisis in Mexico in 1994 affected risk assessment (as measured by the stripped spread) in other Brady countries, especially Poland. Their main finding: The risk...

This paper investigates the vulnerability of countries in sub - Saharan Africa to uncertainty about commodity prices, exchange rates, and interest rates. It discusses some of the instruments these countries can use to manage financial risk and conclude that instruments linked to commodity prices...

In the long run, sound, efficient securities markets can contribute to economic growth; in the short run, they play an important role in financial liberalization. The author provides a guide to issues involved in institutional and regulatory reform of securities markets - and a discussion of the...

The authors developed a framework for analyzing the relationship between domestic financial markets and the effects of trade liberalization and applied it to Sri Lanka's experience between 1977 and 1987. They found that the domestic financial market significantly affects the outcome of trade...