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658.152 --- 658.152 Capital investment. Fixed assets. Use of funds --- Capital investment. Fixed assets. Use of funds --- Investment management

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Little empirical investigation exists of the links among capital account liberalization, prudential regulation and supervision, financial crises, and economic development, mainly because of the lack of comparable measures to describe regulatory practices for different countries. This paper examines empirically, albeit in a preliminary manner, these links using new measures of capital controls, prudential regulation, supervision, and depositors’ safety for a sample of 15 developing economies over the period 1990–97. Results confirm the importance of the degree of capital account convertibility and the regulatory and supervisory framework in affecting financial fragility and economic performance.

Banks and Banking --- Exports and Imports --- Financial Markets and the Macroeconomy --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Financial Crises --- International economics --- Economic & financial crises & disasters --- Capital controls --- Banking crises --- Capital account liberalization --- Capital account --- Capital flows --- Balance of payments --- Financial crises --- Capital movements --- South Africa

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November 1999 - While macroeconomic reforms are necessary, firms' investment response is likely to remain limited without an accompanying improvement in public sector performance. Investment rates in Uganda are similar to others in Africa - averaging slightly more than 10 percent annually, with a median value of just under 1 percent. But the country's profit rates are considerably lower. These results are consistent with the view that Ugandan firms display more confidence in the economy than their counterparts in other African countries. Thus, for given profit rates, Ugandan firms invest more. At the same time, increased competition (because of economic liberalization) has exerted pressure on firms to cut costs. Many of those costs are not under the firms' control, however, so their profits have suffered. Using firm-level data, Reinikka and Svensson identify and quantify a number of cost factors, including those associated with transport, corruption, and utility services. Several factors - including crime, erratic infrastructure services, and arbitrary tax administration - not only increase firms' operating costs but affect their perceptions of the risks of investing in (partly) irreversible capital. The empirical analysis suggests that firms - especially small firms - are liquidity-constrained in the sense that they invest only when sufficient internal funds are available. But given the firms' profit-capital ratio, it is hard to argue that the liquidity constraint is binding in most cases, even though the cost of capital is perceived as a problem. This paper - a joint product of Macroeconomics 2, Africa Region, and Public Economics and Macroeconomics and Growth, Development Research Group - is part of a larger effort in the Bank to study economic policy, public service delivery, and growth. The authors may be contacted at rreinikka@worldbank.org or jsvensson@worldbank.org.

Banks and Banking Reform --- Capital Investment --- Debt Markets --- Economic Liberalization --- Economic Theory and Research --- Emerging Markets --- Finance --- Finance and Financial Sector Development --- Financial Literacy --- Financial Support --- Future --- Good --- Infrastructure Economics and Finance --- Investing --- Investment --- Investment and Investment Climate --- Investment Rates --- Labor Policies --- Liquidity --- Liquidity Constraint --- Macroeconomic Management --- Macroeconomic Policies --- Macroeconomics and Economic Growth --- Microfinance --- Non Bank Financial Institutions --- Private Investment --- Private Participation in Infrastructure --- Private Sector Development --- Prof Profits --- Public Investment --- Return --- Share --- Social Protections and Labor --- Tax

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This paper analyzes some of the structural problems associated with the Korean financial sector, and investigates whether the financial system has allocated credit in an efficient way over the past three decades. Using data for 32 manufacturing sectors, we find no evidence that credit flows were directed to the relatively more profitable sectors, either before or after the financial reforms. We also find that the flow of credits did not contribute to improve the economic performance of the favored industries over time.

Exports and Imports --- Money and Monetary Policy --- Industries: Financial Services --- Financial Markets and the Macroeconomy --- General Financial Markets: Government Policy and Regulation --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Economywide Country Studies: Asia including Middle East --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: General --- International Lending and Debt Problems --- Monetary economics --- Finance --- International economics --- Credit --- Bank credit --- Loans --- Financial sector --- External debt --- Money --- Financial institutions --- Economic sectors --- Financial services industry --- Debts, External --- Korea, Republic of

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Recapitalizing banks in a systemic crisis is a complex medium-term process that requires significant government intervention and careful management at both the strategic and individual bank levels. This paper highlights the range of operational and strategic issues to be addressed and the institutional arrangements needed to foster an effective banking system restructuring and maximize the returns on government investment. The approaches to recapitalization have varied, with countries choosing different mixes of direct capital injections and asset purchase and rehabilitation. The choice of an appropriate mix is critical, to minimize the expected present value of government outlays net of recoveries.

Banks and Banking --- Finance: General --- Investments: Bonds --- Industries: Financial Services --- Financial Risk Management --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Governmental Loans, Loan Guarantees, Credits, and Grants --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- General Financial Markets: General (includes Measurement and Data) --- General Financial Markets: Government Policy and Regulation --- Financial Institutions and Services: Government Policy and Regulation --- Debt --- Debt Management --- Sovereign Debt --- Banking --- Finance --- Investment & securities --- Economic & financial crises & disasters --- Loans --- Bonds --- Distressed assets --- Bank resolution --- Financial institutions --- Financial crises --- Financial sector policy and analysis --- Debt restructuring --- Asset and liability management --- Banks and banking --- Crisis management --- Debts, External --- Mexico