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Financial Sector

Pourquoi le secteur financier est-il aussi peu développé dans la zone CFA?

Raju Jan Singh's picture

Durant les années 1980s et les débuts 1990s, beaucoup de pays africains ont entrepris des réformes afin de développer leur secteur financier. Les secteurs financiers dans les pays africains demeurent toutefois parmi les moins développés de la planète. En Afrique, le développement financier dans la zone CFA  est encore plus limité. Pourquoi ? Dhaneshwar Ghura, Kangni Kpodar et moi-même examinons précisément  cette question.

Why are CFA countries’ financial sectors so shallow?

Raju Jan Singh's picture

During the 1980s and early 1990s, many African countries undertook reforms to deepen their financial sectors. Nevertheless, financial sectors in African countries remain among the shallowest in the world.  Within Africa, financial depth in the CFA franc zone is even more limited.  Why? Dhaneshwar Ghura, Kangni Kpodar and I examine this question.

Microfinance: Dream vs. Reality

Asli Demirgüç-Kunt's picture

Microfinance started as a simple idea: to provide loans to poor entrepreneurs.  Today it is a much more diverse and dynamic sector, and includes institutions that provide savings and remittance services, sell insurance, and offer loans for a wide range of purposes.  The idea now is to focus on bringing a range of financial services to the underserved.  The institutions that focus on this mission vary in the income levels of the customers they serve, their use of subsidies, and the breadth and quality of services offered.  This diversity also presents microfinance providers new opportunities as well as trade-offs.

When Muhammad Yunus and Grameen Bank won the Nobel Peace Prize in 2006, the world community celebrated the ways that expanding financial access can improve the lives of the poor.  Many microfinance “insiders” have been working toward a second goal as well: to find ways to provide microfinance on a commercial basis, without long-term subsidies.  The argument that microfinance institutions should seek profits has an appealing “win-win” resonance, admitting little trade-off between social and commercial objectives.  Should institutions move up-market to provide larger loans and improve financial performance?  Is deposit-taking feasible at such scales?  Can socially-minded institutions survive commercial competition and regulation without re-defining their mission?

Re-visiting Exchange Rate Regimes

Raj Nallari's picture

The choice of exchange rate regimes by governments has evolved since the 1990s. In the early 1990s, as transition economies joined the world economy, they pegged to the Deutsche Mark, while the East Asian countries were pegged to the US dollar.

Back to the Future

Eliana Cardoso's picture

Imagine if, in 1799 – the year in which Napoleon seized power – a research institute had published its global forecasts for the next 20 years. Its researchers would have known about the tremendous changes that took place over the previous two decades: from the United States’ declaration of independence, through the French Revolution and the execution of Louis XVI, up to Napoleon’s victory over Austria in his Italy Campaign.

Even so, the chances of the researchers accurately predicting the events that came to pass over the subsequent 20 years, including their impact on the 19th century’s world order, would have been infinitesimal. No one could have anticipated that Napoleon would have plunged Europe into non-stop war for a decade until being overcome at Waterloo, or that, by the time of his defeat, he would already have swept away the foundations of traditional structures and initiated an unstoppable wave of reforms.

Because of its industrial might, this Europe would dominate the rest of the world during the 19th century. When European rivalries exploded into World War One, the face of the earth had already changed considerably compared to the previous century. And, having changed the world, Europe set the conditions for the demise of its own empire. Even before World War One, Teddy Roosevelt had heralded the start of the United States’ ascension to its current hegemony.

The Disastrous Consequences of Weak Financial Sector Policies

Asli Demirgüç-Kunt's picture

What is the role of the financial sector in development?  Does it really contribute, or does it merely respond to the demands of the real sector?  Are markets simply casinos for betting, or do they perform some productive role?  Shouldn’t the development community just focus its attention on more important issues, such as health, education, and the real sector?

I hear these questions all the time.  It is not surprising because prominent economists also hold conflicting views.  Many development economists do not even bother to discuss the role of the financial sector in development.  Joan Robinson famously stated “Where enterprise leads, finance follows,” and Robert Lucas has argued that the role of finance in the literature on growth has been “over-stressed.”

But at the other extreme, Joseph Schumpeter observed “The banker…authorizes people in the name of society…to innovate” and Merton Miller stated: “That financial markets contribute to economic growth is a proposition almost too obvious for serious discussion.”  This debate is crucial since it affects the decisions of policymakers to prioritize financial sector reforms, and the attention they pay to identifying and adopting appropriate financial sector policies.  Where do we come out?

Is Fiscal Activism Back?

Raj Nallari's picture

I. Rethinking Fiscal Activism

The challenge of raising aggregate demand is now a global phenomenon. To get an understanding of the underlying processes, take the case of the US. Here, the fall in the stock market and owner occupied real estate led to an erosion of household wealth by over $10 trillion by June 2009. This led to an estimated decrease in aggregate demand by about $600 annually, or about 3% of GDP, due to a fall in household spending by about $400 billion and production by $200 billion. Automatic stabilizers like a decrease in personal and corporate taxes cushion the fall in aggregate demand by about a third, but still leaving a net GDP gap of about $400 billion annually1. So the present challenge in the US alone lies in policies that could potentially raise aggregate demand by about $400 billion annually.

In many advanced countries, including the United States, the scope of monetary policy to forcefully affect demand is limited to interest rates. However, interest rates in many of these countries are already at historically very low levels, leaving little leverage for further use of this instrument. In many emerging and developing economies, though central banks have lowered interest rates, they have done so cautiously so as to maintain incentives for capital inflows and external stability. Given the extent of the downturn and the limits to monetary policy action, fiscal policy is regarded as being crucial in providing short and medium term support to the global economy. However, while a fiscal response across many countries may be needed, not all countries have sufficient fiscal space to implement it since expansionary fiscal actions may threaten the sustainability of fiscal finances. This note discusses the possible fiscal policy goals, options and the potential long term impacts.

Why We Should Favor (Slightly) Less Efficient Financial Markets

Jamus Lim's picture

Lost in many of the post-crisis financial reform proposals to rein in destructive financial innovation---such as calls to ban naked CDS, establish centralized clearinghouses for derivatives, and eliminate high-frequency trading---is the broader issue of whether these innovations could actually enhance welfa

How 'Big Data' Can Benefit the Public Good

Aleem Walji's picture

Patrick Svenburg, co-founder of Random Hacks of Kindness, tells "Developers for Development" audience: "There's no shortage of big ideas in the world.  It's the action part that's often lacking."


“Big Data” –- the billions upon trillions of bytes of digital information that are pumped into cyberspace every nanosecond –- has a single, secular mission: to keep growing. Now, software developers – the not-so-nerdy techies who keep Big Data growing at its feverish rate –- are striving to channel Big Data into the public good.

On Monday at the World Bank, developers came together with the development community -- in person and virtually through Skype video -- to figure out how to do that.

The entire "Developers for Development" can be seen on B-Span, the World Bank's webcasting service.

The afternoon event, which attracted an auditorium-ful of in-person visitors (many of them curious staffers from risk management and ICT at the World Bank) and many more via the live webcast that was offered in English, French, and Spanish, started with developers showing what's already been achieved since the first CrisisCamp about data and the public good was convened in Washington with CrisisCommons-World Bank co-sponsorship in June 2009.

The first demo was about the on-the-fly proliferation of CrisisCamps internationally in response to the earthquake that devastated Haiti in February.


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