Germany's pension system was originally designed as a scaled premium system. It formally became a pay-as-you-go system in 1957. Participation in the system is mandatory for all dependent employees and only some groups of self-employed. The system is greatly fragmented in terms of institutions,...

Solvency-both as an economic requirement in the market and as a regulatory and supervisory tool-is critical to all insurance markets. Current market conditions, coupled with expected institutional changes, will place particular burdens on emerging and developing markets. Institutional solvency,...

The author sets out a methodology for analyzing episodes of high real interest rates in emerging market economies. He reviews the literature on what determines spreads in deposit rates and loan rates. Then he links the causes of interest rate spreads by explicitly modeling the incentive effect...

The authors provide a conceptual framework for designing a comprehensive risk financing strategy for a firm, using an optimal combination of three instruments: self-retention, contingent debt, and insurance. Using an original conceptual model, the risk management decisions of the firm are first...

The high commercial lending rates Nicaragua is currently experiencing, together with a perceived scarcity of credit, have often been blamed for the country's slow growth and have been considered a major failing of the adjustment program initiated in 1991. The author insists that such blame is...

International consultants on bank regulation, and supervision for developing countries, often base their advice on how their home country does things, for lack of information on practice in other countries. Recommendations for reform have tended to be shaped by bias rather than facts. To better...

Since 1994, the World Bank has provided partial credit guarantees to private financiers of several large infrastructure projects in developing countries. A major objective of the partial guarantee program is to leverage Bank resources so as to provide developing countries with better private...

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...

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...

Recent debate about the pro-cyclical effects of bank capital requirements, has ignored the important role that bank loan loss provisions play in the overall framework of minimum capital regulation. It is frequently observed that under-provisioning, due to inadequate assessment of expected credit...