Global Financial Development Report 2013: Rethinking the Role of the State in Finance

The World Bank's first-ever Global Financial Development Report is organized in five chapters and each of them has main messages highlighted at the beginning. Firstly, there should be caution when it comes to the state's role in financial development. Secondly, incentives are crucial in th...

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Bibliographic Details
Published in:Public sector economics 2014-01, Vol.38 (1), p.97
Main Author: Baðun, Marijana
Format: Article
Language:English
Subjects:
Auditing procedures
Banks
Competition
Development economics
Economic crisis
Economic growth
Financial management
Financial services
Incentives
International
International finance
Public officials
Regulation of financial institutions
Supervision
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Summary:The World Bank's first-ever Global Financial Development Report is organized in five chapters and each of them has main messages highlighted at the beginning. Firstly, there should be caution when it comes to the state's role in financial development. Secondly, incentives are crucial in the financial sector. Thirdly, when it comes to regulation and supervision, the basic ingredient is a solid, transparent and not too complex institutional framework. Fourthly, competition is good; it can improve efficiency and enhance access to financial services without necessarily undermining financial stability. Fifth, lending by state-owned banks can play a positive role in stabilizing aggregate credit in a downturn, but it can also lead to resource misallocation and deterioration of the quality of intermediation due to the serving of political interests. Consequently, the Report stresses that "finance is central to development". In other words, "finance matters, both when it functions well and when it functions poorly".
ISSN:2459-8860