Group-based financial institutions for the rural poor in Bangladesh: an institutional- and household-level analysis

Table of Contents: Tables, Figures, Foreword, Acknowledgments, and Summary; 1. Introduction; 2. Determinants of the Placement and Outreach of Group-Based Financial Institutions:A County-Level Analysis; 3. Group-Based Financial Institutions:Structure, Conduct, and Performance; 4. Household Participation in Financial Markets; 5. Analysis of the Household-Level Impact of Group-Based Credit Institutions in Bangladesh; 6. Conclusions and Implications for Policy; Appendix A: Survey Modules, Sampling Frame, and Location of Survey Sites; Appendix B: Adult Equivalent Consumption Units Differentiated by Age and Gender; ReferencesRural poor, Financial institutions, Microenterprises, Household surveys,

The Effect of Financial Institutions Banking Soundness Against Stock Price

This study was conducted to determine the effect of the soundness of banking financial institutions variable as measured by Return on Assets, Net Interest Margin, and Capital Adequacy Ratio on share prices at government banks in the Indonesia Stock Exchange for the period 2008-2015. The population of this study is the Government commercial banks consisting of BRI Bank, BNI Bank, BTN Bank, and Bank Mandiri. The sample of this study is the assessment of the soundness of government commercial banks on stock prices, with the scope of the assessment covering the factors of ROA, NIM, and CAR. The sample was obtained through the publication of 2008-2015 annual financial statements totaling 32 data. The analysis technique uses multiple linear regression analysis, while the measurement tool uses t test, F test, and the coefficient of determination (R2) test. The results showed that the ROA variable had a positive and significant effect on stock prices, the NIM variable had a negative and significant effect on stock prices, the CAR variable had a positive and significant effect on stock prices at government commercial banks in the Indonesia Stock Exchange

Financial Institutions, Financial Contagion, and Financial Crises

Financial crises are endogenized through corporate and interbank market institutions. Financial crises can emanate from financial institutions which determine the nature of equilibrium in the interbank market. Single-bank financing leads to a pooling equilibrium whereby all illiquid banks are treated in the same manner in the interbank market. With private information about one's own solvency, the best illiquid banks will not borrow but rather will liquidate some premature assets. The withdrawals of the best banks from the interbank market will generate negative externalities in the market. Consequently, the quality of the interbank market will decline - which will make the more solvent but illiquid banks withdraw from the market - and thus the quality of the market will be further deteriorated and more banks will withdraw from the market, until interbank market collapses. However, multi-bank financing leads to a separating equilibrium whereby solvent and insolvent banks are distinguishable in the interbank market. As a result, bank runs are limited to illiquid and insolvent banks, and idiosyncratic shocks never trigger a bank run contagion.

Financial Institutions, Financial Contagion, and Financial Crises

This paper endogenizes financial contagion and financial crises from financial institutions. We show that financial crises can emanate from financial institutions which generate soft-budget constraints (SBC). The prevailing SBC in an economy distort in-formation such that the interbank lending market faces a "lemon" problem. The lemon problem in the lending market may contribute to bank-run contagions and can lead to the collapse of the lending market while inducing a run on the economy. Moreover, due to the lemon problem in the financial system, a rational government policy in this economy will lead to a SBC trap that all the illiquid banks are to be bailed out. In comparison, we show that an economy with a predominance of diversified financial institutions will be featured by hard-budget constraints. From this point, we show mechanisms that in this economy firms disclose timely information to the banks and to the financial market as a whole. Thus bank runs can be stopped, contagious risks contained and financial crisis prevented.Financial Institutions, Corporate Finance, Bank Run, Financial Contaigion, Financial Crisis

Mainstreaming Informal Financial Institutions

Informal financial institutions (IFIs), among them the ubiquitous rotating savings and credit associations, are of ancient origin. Owned and self-managed by local people, poor and non-poor, they are self-help organizations which mobilize their own resources, cover their costs and finance their growth from their profits. With the expansion of the money economy, they have spread into new areas and grown in numbers, size and diversity; but ultimately, most have remained restricted in size, outreach and duration. Are they best left alone, or should they be helped to upgrade their operations and integrate into the wider financial market? Under conducive policy conditions, some have spontaneously taken the opportunity of evolving into semiformal or formal microfinance institutions (MFIs). This has usually yielded great benefits in terms of financial deepening, sustainability and outreach. Donors may build on these indigenous foundations and provide support for various options of institutional development, among them: incentives-driven mainstreaming through networking; encouraging the establishment of new IFIs in areas devoid of financial services; linking IFIs/MFIs to banks; strengthening NGOs as promoters of good practices; and, in a nonrepressive policy environment, promoting appropriate legal forms, prudential regulation and delegated supervision. --

Financial Institutions, Contagious Risks, and Financial Crises

In this paper contagious risks and financial crises are endogenized through the interactions among corporations, banks, and the interbank market. We show that the lack of financial discipline in a single-bank-financing economy generates informational problems and thus the malfunction of the interbank market, which constitutes a mechanism of financial contagion and may lead to a financial crisis. In contrast, financial discipline in an economy with diversified financial institutions leads to timely information disclosure from firms to banks and improves the informational environment of the interbank market. With symmetric information in the interbank market, bank runs are contained to insolvent banks and financial crises are prevented. Our theory sheds light on the causes and timing of the East Asian crisis; it also has important policy implications for the lender of last resort and banking reform.Banking and Finance, International Trade and Finance, financial institutions, contagious risks, financial crises

Legal Institutions and Financial Development

Why do some countries have growth-enhancing financial systems, while others do not? Why have some countries developed the necessary investor protection laws and contract-enforcement mechanisms to support financial institutions and markets, while others have not? This paper reviews existing research on the role of legal institutions in shaping financial development.