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Foreign bank participation has increased steadily across developing countries since the mid-1990s. This paper documents this trend and surveys the existing literature to explore the drivers and consequences of this phenomenon, paying particular attention to the differences observed across regions both in the degree of foreign bank participation and in the impact of this process. Local profit opportunities, the absence of barriers to entry, and the presence of mechanisms to mitigate information problems have been the main factors driving foreign bank entry across developing countries. In general, foreign bank participation has been shown to exert a positive influence on banking sector efficiency and competition. The weight of the evidence suggests that foreign bank presence does not endanger, but rather enhances banking sector stability. And although some case studies suggest that foreign bank entry limits access to finance, many cross-country studies offer evidence to the contrary.

Access to Finance --- Bank branches --- Bank for international settlements --- Banking sector --- Banking stability --- Banking system --- Banks & Banking Reform --- Debt --- Debt Markets --- Emerging Markets --- Finance and Financial Sector Development --- Financial integration --- Financial regulation --- Financial services --- Foreign banks --- Foreign Direct Investment --- Foreign entry --- Interest income --- Interest rates --- International Economics and Trade --- Legal framework --- Legislation --- Operating costs --- Overhead costs --- Private Sector Development --- Profitability --- Return on assets --- Subsidiaries

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In the East Asian crisis, connections - with industrial groups or influential families - increased the probability of distress for financial institutions. Connections also made closure more, not less, likely, suggesting that the closure processes themselves were transparent. But larger institutions, although more likely to be distressed, were less likely to be closed, suggesting a too big to fail policy; Politics and regulatory capture can play an important role in financial institutions' distress. East Asia's financial crisis featured many distressed and closed financial intermediaries in an environment with many links between government, politicians, supervisors, and financial institutions. This makes the East Asian financial crisis a good event for studying how such connections affect the resolution of financial institutions' distress. Bongini, Claessens, and Ferri investigate distress and closure decisions for 186 banks and 97 nonbank financial institutions in Indonesia, the Republic of Korea, Malaysia, the Philippines, and Thailand. They find that after July 1997, 42 percent of the institutions experienced distress (were closed, merged, or recapitalized, or had their operations temporarily suspended). By July 1999, 13 percent of all institutions in existence in July 1997 had been closed. Using financial data for 1996, the authors find that: Traditional CAMEL-type variables - returns on assets, loan growth, and the ratio of loan loss reserves to capital, of net interest income to total income, and of loans to borrowings - help predict subsequent distress and closure; None of the foreign-controlled institutions was closed, and foreign portfolio ownership lowered an institution's probability of distress; Connections - with industrial groups or influential families - increased the probability of distress, suggesting that supervisors had granted forbearance from regulations. Connections also made closure more, not less, likely - suggesting that the closure processes themselves were transparent; But larger institutions, although more likely to be distressed, were less likely to be closed, while (smaller) nonbank financial institutions were more likely to be closed. This suggests a too big to fail policy; These policies, together with the fact that resolution processes were late and not necessarily comprehensive, may have added to the overall uncertainty and loss of confidence in the East Asian countries, aggravating the financial crisis. This paper - a product of the Financial Sector Strategy and Policy Group, Financial Sector Vice Presidency - is part of a larger effort in the group to study the causes and resolution of financial distress. The authors may be contacted at pbongini@mi.unicatt.it, cclaessens@worldbank.org, or gferri@worldbank.org.

Balance Sheet --- Banking System --- Banks and Banking Reform --- Currencies and Exchange Rates --- Debt Markets --- E-Business --- Economic Policy, Institutions and Governance --- Emerging Markets --- Finance --- Finance and Financial Sector Development --- Financial Crisis --- Financial Distress --- Financial Institutions --- Financial Intermediation --- Financial Literacy --- Financial Risks --- Good --- Interest --- Interest Income --- Investors --- Loan --- Loans --- Loss Of Confidence --- Macroeconomics and Economic Growth --- Non Bank Financial Institutions --- Political Economy --- Portfolio --- Private Sector Development --- Prudential Regulations --- Public Institution Analysis and Assessment --- Public Sector Development --- Reserves --- Return --- Return On Assets

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In the East Asian crisis, connections - with industrial groups or influential families - increased the probability of distress for financial institutions. Connections also made closure more, not less, likely, suggesting that the closure processes themselves were transparent. But larger institutions, although more likely to be distressed, were less likely to be closed, suggesting a too big to fail policy; Politics and regulatory capture can play an important role in financial institutions' distress. East Asia's financial crisis featured many distressed and closed financial intermediaries in an environment with many links between government, politicians, supervisors, and financial institutions. This makes the East Asian financial crisis a good event for studying how such connections affect the resolution of financial institutions' distress. Bongini, Claessens, and Ferri investigate distress and closure decisions for 186 banks and 97 nonbank financial institutions in Indonesia, the Republic of Korea, Malaysia, the Philippines, and Thailand. They find that after July 1997, 42 percent of the institutions experienced distress (were closed, merged, or recapitalized, or had their operations temporarily suspended). By July 1999, 13 percent of all institutions in existence in July 1997 had been closed. Using financial data for 1996, the authors find that: Traditional CAMEL-type variables - returns on assets, loan growth, and the ratio of loan loss reserves to capital, of net interest income to total income, and of loans to borrowings - help predict subsequent distress and closure; None of the foreign-controlled institutions was closed, and foreign portfolio ownership lowered an institution's probability of distress; Connections - with industrial groups or influential families - increased the probability of distress, suggesting that supervisors had granted forbearance from regulations. Connections also made closure more, not less, likely - suggesting that the closure processes themselves were transparent; But larger institutions, although more likely to be distressed, were less likely to be closed, while (smaller) nonbank financial institutions were more likely to be closed. This suggests a too big to fail policy; These policies, together with the fact that resolution processes were late and not necessarily comprehensive, may have added to the overall uncertainty and loss of confidence in the East Asian countries, aggravating the financial crisis. This paper - a product of the Financial Sector Strategy and Policy Group, Financial Sector Vice Presidency - is part of a larger effort in the group to study the causes and resolution of financial distress. The authors may be contacted at pbongini@mi.unicatt.it, cclaessens@worldbank.org, or gferri@worldbank.org.

Balance Sheet --- Banking System --- Banks and Banking Reform --- Currencies and Exchange Rates --- Debt Markets --- E-Business --- Economic Policy, Institutions and Governance --- Emerging Markets --- Finance --- Finance and Financial Sector Development --- Financial Crisis --- Financial Distress --- Financial Institutions --- Financial Intermediation --- Financial Literacy --- Financial Risks --- Good --- Interest --- Interest Income --- Investors --- Loan --- Loans --- Loss Of Confidence --- Macroeconomics and Economic Growth --- Non Bank Financial Institutions --- Political Economy --- Portfolio --- Private Sector Development --- Prudential Regulations --- Public Institution Analysis and Assessment --- Public Sector Development --- Reserves --- Return --- Return On Assets

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Due to falling fertility rates, the aging of the baby-boom cohort, and increases in life expectancy, the percentage of the population that is elderly is expected to increase rapidly in the United States and Japan over the next two decades. These fourteen essays show that, despite differences in culture and social and government structure, population aging will have many similar macro and micro effects on the economic status and behavior of the elderly in both countries. The most obvious effects will be on social programs such as public pension systems and the provision for medical needs of the elderly. But, the contributors demonstrate, aging will also affect markets for labor, capital, housing, and health care services. It will affect firms through their participation in the demand side of the labor market and through their provisions for pensions. And aging will influence saving rates, the rate of return on assets, the balance of payments, and, most likely, economic growth. This volume will interest scholars and policy makers concerned with the economics of aging.

Older people --- Age distribution (Demography) --- Economic conditions --- Economic aspects --- JP / Japan - Japon --- US / United States of America - USA - Verenigde Staten - Etats Unis --- 339.112.10 --- 368.43 --- 339.112.0 --- 332.832 --- 658.324 --- 332.834 --- 336.024 --- 339.311.0 --- 311.94 --- NBB congres --- Eigendom van grond en van onroerende goederen: algemeenheden. --- Ouderdomsverzekering. Voorbarige dood. Weduwen en wezen. --- Particulier vermogen: algemeenheden. --- Pensioen. Brugpensioen. --- Pensioenen. Verzekeringen. --- Pensioensparen. --- Sociale begroting, rekeningen en uitgaven. Gezondheid. --- Sparen: algemeenheden. --- Verdeling van de bevolking naar leeftijd. Veroudering van de bevolking. --- Aged --- Aging people --- Elderly people --- Old people --- Older adults --- Older persons --- Senior citizens --- Seniors (Older people) --- Distribution, Age (Demography) --- Age groups --- Persons --- Gerontocracy --- Gerontology --- Old age --- Age --- Vital statistics --- Population aging --- Verdeling van de bevolking naar leeftijd. Veroudering van de bevolking --- Pensioen. Brugpensioen --- Pensioensparen --- Sociale begroting, rekeningen en uitgaven. Gezondheid --- Particulier vermogen: algemeenheden --- Eigendom van grond en van onroerende goederen: algemeenheden --- Sparen: algemeenheden --- Ouderdomsverzekering. Voorbarige dood. Weduwen en wezen --- Pensioenen. Verzekeringen --- Older people - United States - Economic conditions - Congresses. --- Older people - Japan - Economic conditions - Congresses. --- Age distribution (Demography) - Economic aspects - United States - Congresses. --- Age distribution (Demography) - Economic aspects - Japan - Congresses. --- aging, sociology, united states, japan, getting older, economy, economics, economic effects, falling fertility rates, baby-boom cohort, life expectancy, aged, age distribution, elderly, essays, essay collection, social issues, behavior, public pension systems, medical needs, health care services, housing, capital, labor, savings, balance of payments, return on assets.