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Who Disciplines Bank Managers?

Martin Cihak's picture

If you owned a commercial bank and it started creating losses, you would probably want to replace the bank’s managers, right? In fact, you would probably like to replace them before the bank starts generating losses. And if your bank’s managers knew in advance that they would get fired if they don’t ensure the bank’s financial soundness, they would work to ensure that the bank is financially sound, correct? Well, it is not that simple.

Yes, when banks dip into the red, their managers do lose jobs. Indeed, losses incurred by U.S. banks during the recent financial crisis coincided with forced departures of their executives. In addition to highly-publicized executive turnovers in major financial institutions, such as Citigroup and Merrill Lynch, there have also been many turnovers at smaller and less widely known banks such as Douglass National Bank and Riverside Bank. The reasons for the turnovers are not always clear, although various explanations can be found. For example, when Riverside Bank CEO John Moran was fired in June 2008, one of the board members was quoted as saying “John is a great banker, unfortunately he'd never been through the tough times of banking right now. … He's not as seasoned as what we need in today's banking climate.”

Can protected areas conserve forests?

Ken Chomitz's picture

What’s the role of national parks, nature reserves, and other protected areas in conserving tropical forests? Views have see-sawed on this. In the 1990s, protected areas were often derided as ineffective ‘paper parks.’   But mounting evidence from satellite photos showed that deforestation inside protected areas was in fact substantially lower than deforestation outside. Then, a new wave of more sophisticated analyses pointed out that many protected areas were in remote areas or on mountainsides.   So lack of deforestation in these areas didn’t necessarily indicate the success of legal protection. It might just mean that farmers or loggers didn’t find it attractive to clear these inaccessible forests.

At the same time, many social advocates worried that if parks were effective at protecting forests, it must be at the expense of local livelihoods. Strict protected areas typically prohibit the extraction of forest products that poor people need for subsistence and income. On the other hand, it was assumed that relaxing these restrictions – for instance, allowing local people to gather fuelwood and harvest timber – would inevitably lead to forest degradation.

A newly published study provides some surprising and encouraging findings on protected area impacts. The study used global satellite data on forest fires as an indicator of deforestation, and assessed all officially-recognized tropical forest protected areas. The fate of forest plots inside protected areas were compared with otherwise similar, but unprotected points. This corrects for potential bias from the placement of many protected areas in inaccessible regions – and from the establishment of others, to the contrary, as defenses for forests that face particularly high pressure for deforestation.

Sanity in the Great Methodology Debate

David McKenzie's picture

The increased use of randomized experiments in development economics has its enthusiastic champions and its vociferous critics. However, much of the argument seems to be battling against straw men, with at times an unwillingness to concede that the other side has a point. During our surveys of assistant professors and Ph.D.

Weekly Wire: the Global Forum

Kalliope Kokolis's picture

These are some of the views and reports relevant to our readers that caught our attention this week.

Kiwanja
Putting data integrity on the map

"To kick off the discussion around the new guide, we hosted a panel discussion at Johns Hopkins’ School of Advanced International Studies, where FrontlineSMS’ Sean McDonald joined Jon Gosier of metaLayer, Development Seed’s Paul Goodman, and Internews Vice President for New Media Kathleen Reen, who moderated the event. This research effort, based on FrontlineSMS user input and research by Kristina Lugo and Carol Waters, focused not on mobile system security, a critical issue better addressed by others, but more on the ways that contextualized program design and implementation can improve data quality and reduce user risk. Above all, we learned through the process, context is key. Understanding the needs and norms of the target population, and the goals of the project itself, is vital in determining the proper tools and approach to designing a FrontlineSMS workflow that can achieve those goals." READ MORE

Nourishing the hopes of millions of Egyptians

Aida Haddad's picture

The story of Ghalia Mahmoud published in the August 17th edition of the Washington Post took me by surprise. I had hardly finished the article when questions began to fill my head and my heart started to flutter with excitement.  Was it because Ghalia, previously a maid, had  succeeded in becoming a TV host? Or was it that the Washington Post was interested in telling her story, deeming it worthy of publishing? Or was it tied to my glimpse of the World Bank report on Food Price Watch a few days earlier? It reported that the high level of global food prices and continued price volatility, posed a constant threat to the poorest segments of the population in developing countries.

How Many More Bangladeshis are Now Breaking out of Poverty?

Naomi Ahmad's picture

Bangladesh reduced poverty from 40 percent to 31.5 percent between 2005 and 2010, according the new Household Income & Expenditure Survey (HIES) 2010. Progress can also be seen in other dimensions of development.

The HIES is a major source of socio-economic information at the household level in Bangladesh. It provides data on household expenditure, income, consumption, savings, housing conditions, education, employment, health, sanitation, water supply, electricity usage, etc.

Bill Easterly chimes in on Part III of our series

Berk Ozler's picture

Bill Easterly was kind enough to send us some detailed comments on Part III of our series on "The Impact of Economics Blogs," asking us that we post them on our blog. We are more than happy to oblige:

Berk, thanks for offering to post this response to your post on your blog. I respect you and many others in the World Bank's Research Department who produce very high quality research that meets rigorous academic standards.

Credit Ratings Matter for Those Who Need Them Most

Otaviano Canuto's picture

Debt and credit ratings keep making headlines. But for a moment, forget about their impact in the U.S. and Europe, where an abundant set of economic data exists both for international investors and bondholders. Instead, think of what would happen if you lived in one of the 58 developing countries that remain unrated by Standard & Poor’s, Moody’s, and Fitch, the three international credit rating agencies.

Is Open Data Really the Solution?

Sabina Panth's picture

Proponents of governments opening data to the public in order to increase transparency and better governance have been cheering recent developments, debates and discussions.  While I have used this blog to highlight many of the advantages of Open Data in instigating demand-led governance, I recently stumbled upon an article by Tom Slee which has a different take on the digital solution. Below I summarize a few points from Slee’s article which I feel are worthy of contemplation.


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