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Chinese banks generate large profits and have relatively low nonperforming loans. However, good financial performance does not, in itself, guarantee that banks efficiently intermediate the economy's financial resources. This paper first examines how efficient Chinese banks are in financial intermediation, using the stochastic production frontier approach. Quality of loans are controlled for by focusing on net loans and correcting for nonperforming loans; Hong Kong SAR banks are included in the sample to have a more universally representative production frontier. The results suggest that Chinese banks indeed became more efficient during 2001-07. Nevertheless, a majority of banks remain quite inefficient, including several large state owned banks and many city banks. Large banks tend to hoard deposits and operate beyond the point of diminishing returns to scale, while smaller banks operate at increasing returns to scale. This suggests that reallocating deposits from large to smaller banks would increase overall efficiency. The paper finds no significant correlation between bank efficiency and profitability. Possible factors leading to large profits in the banking system, despite wide-spread inefficiencies, are low deposit interest rates, large interest margins, and high market concentration. Moving to indirect monetary policy and deepening capital markets to channel some of the savings to productive investment would help improve the efficiency of financial intermediation. This may spur loan growth, however, which will need to be handled with monetary policy and regulatory/supervisory tools.

Banks and banking --- China --- Economic conditions. --- Banks and Banking --- Money and Monetary Policy --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Banking --- Finance --- Monetary economics --- Commercial banks --- Loans --- Nonperforming loans --- Bank credit --- Credit --- China, People's Republic of

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The paper assesses the effects of certain institutional factors on financial sector development in Sub- Saharan Africa (SSA). Data Envelopment Analysis (DEA) is applied to determine the extent to which these institutions affect the financial sector, and to suggest which institutions play a more critical role in each country. Results suggest that institutional factors affect financial depth and access to financial services more than asset quality and profitability (measured by nonperforming loans (NPL) and return on equity (ROE). The results also suggest that depth of credit information has the strongest influence on the NPL ratio, and political stability affects access the most. Based on model findings, policy implications on prioritizing institutional reforms to enhance financial sector development are suggested for individual countries and for country groups.

Finance --- Economics --- Economic theory --- Political economy --- Funding --- Funds --- Social sciences --- Economic man --- Currency question --- Finance: General --- Money and Monetary Policy --- Public Finance --- Industries: Financial Services --- Financial Markets and the Macroeconomy --- Financial Institutions and Services: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Taxation, Subsidies, and Revenue: General --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Public finance & taxation --- Monetary economics --- Financial sector development --- Financial sector --- Nonperforming loans --- Legal support in revenue administration --- Credit --- Financial services industry --- Loans --- Revenue --- Congo, Republic of

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This 2009 Article IV Consultation highlights that Bhutan’s fiscal policy has been anchored by keeping current spending below domestic revenue. Bhutan’s large and volatile trade deficits have been offset by sizable foreign aid flows, resulting in a balance of payments (BOP) surplus and reserve accumulation. The BOP surplus has averaged about 8 percent of GDP over the last few years. Executive Directors have commended the authorities for the strong economic performance anchored by hydropower sector development, and supported by prudent economic management, firm donor support, and political stability.

Financial crises -- Bhutan. --- Fiscal policy -- Bhutan. --- International monetary fund -- Bhutan. --- Monetary policy -- Bhutan. --- Exports and Imports --- Money and Monetary Policy --- Public Finance --- Statistics --- Industries: Financial Services --- International Lending and Debt Problems --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Debt --- Debt Management --- Sovereign Debt --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- National Government Expenditures and Related Policies: General --- International economics --- Public finance & taxation --- Finance --- Monetary economics --- Macroeconomics --- Econometrics & economic statistics --- External debt --- Public debt --- Credit --- Nonperforming loans --- Expenditure --- Money --- Financial institutions --- Debts, External --- Loans --- Debts, Public --- Expenditures, Public --- Bhutan --- Economics --- Economic conditions.