This 2011 Article IV Consultation reports that Cambodia’s high degree of dollarization and largely reduced fiscal space constrain the authorities’ ability to cushion shocks. Macroeconomic stability hinges on prudent fiscal policies. The mission cautioned that fiscal space is...

This paper presents an update to the Financial System Stability Assessment (FSAP) on the Republic of Belarus. The paper reveals that the Belarusian financial sector has so far weathered the ongoing turmoil well, reflecting its relatively closed nature and the dominant role of state-owned banks....

The Central Bank of Tunisia's (CBT) liquidity support contributed to rapid credit growth in Tunisia and an uptick in inflation. The Tunisian economy is expected to recover gradually. Banking sector vulnerabilities are much higher, and stress tests indicate that the banking sector may face large...

Portugal’s financial system is sound, well-managed and competitive, with shorter-term risks and vulnerabilities well contained, and with the system buttressed by a strong financial policy framework. Portuguese banks’ profitability, asset quality, and solvency have held up well in...

This note overviews macroprudential policy options that have been proposed to address the systemic risks experienced during the recent financial crisis. It contributes to the policy debate by providing a taxonomy of macroprudential policies in terms of the specific negative externalities in the...

In light of the importance of banking sector outreach and given concerns that competition may adversely affect it, this study explores the empirical linkage between banking structure and outreach in Turkey for the period 1988–2010. Bank-, province-, and bank-province-level estimation results...

We study a simple general equilibrium model in which investment in a risky technology is subject to moral hazard and banks can extract market power rents. We show that more bank competition results in lower economy-wide risk, lower bank capital ratios, more efficient production plans and...

In this paper we revisit the long debate on the risk effects of bank competition and propose a new approach to the empirical estimation of the relation between deposit market competition and bank risk. Our approach accounts for the opportunity of banks to shift to wholesale funding when deposit...

How can competition enhance bank soundness? Does competition improve soundness via the efficiency channel? Do banks heterogeneously respond to competition? To answer these questions, we exploit an innovative measure of competition [Boone, J., A new way to measure competition, EconJnl, Vol. 118,...

This study investigates the effects of relationship lending on firm innovativeness using a panel of Italian manufacturing firms. In order to disentangle the impact of bank ties on the discovery phase from that in the introduction phase of new technologies, the analysis proceeds in two steps,...