Political institutions and debt crises

This paper shows that political institutions matter in explaining defaults on external and domestic debt obligations. We explore a large number of political and macroeconomic variables using a non-parametric technique to predict safety from default. The advantage of this technique is that it is able to identify patterns in the data that are not captured in standard probit analysis. We find that political factors matter, and do so in different ways for democratic and non-democratic regimes, and for domestic and external debt. In democracies, a parliamentary system or sufficient checks and balances almost guarantee the absence of default on external debt when economic fundamentals or liquidity are sufficiently strong. In dictatorships, high stability and tenure play a similar role for default on domestic debt

Microeconomic institutions and personnel economics for health care delivery: a formal exploration of what matters to health workers in Rwanda

Background: Most developing countries face important challenges regarding the quality of health care and there is a growing consensus that health workers play a key role in this process. Our understanding as to what are the key institutional challenges in human resources, and their underlying driving forces, is more limited. A conceptual framework that structures existing insights and provides concrete directions for policy making is also missing. Methods: To gain a bottom up perspective we gather qualitative data through semi-structured interviews with different levels of health workers and users of health services in rural and urban Rwanda. We conducted discussions with 48 health workers and 25 users of health services in nine different groups in 2005. We maximized within-group heterogeneity by selecting participants using specific criteria that affect health worker performance and career choice. The discussion were analysed electronically, to identify key themes and insights, and are documented with a descriptive quantitative analysis relating to the associations between quotations. The findings from this research are then revisited ten years later making use of detailed follow up studies that have been carried out since then. Findings: The original discussions identified both key challenges in human resources for health, and driving forces of these challenges, as well as possible solutions. Two sets of issues were highlighted: those related to the size and distribution of the workforce, and those related to health workers’ on-the-job performance. Among the latter, four categories were identified: health workers’ poor attitudes towards patients, absenteeism, corruption and embezzlement, and lack of medical skills among some categories of health workers. The discussion suggest that four components constitute the deeper causal factors, which are, ranked in order of ease of malleability: incentives, monitoring arrangements, professional and workplace norms and intrinsic motivation. Three institutional innovations are identified that aim at improving performance: performance pay, community health workers and increased attention to training of health workers. Revisiting the findings from this primary research making use of later in depth studies, the analysis demonstrates their continued relevance and usefulness. We discuss how the different factors affect the quality of care by impacting on health worker performance and labour market choices, making use of insights from economics and development studies on the role of institutions. Conclusion: The study results indicates that health care quality to an important degree depends on four institutional factors at the micro level that strongly impact on health workers performance and career choice, and which deserve more attention in applied research and policy reform. The analysis also helps to identify ways forwards, which fit well with the Ministry’s most recent strategic plan

The State Dependent Impact of Bank Exposure on Sovereign Risk

The theoretical literature remains inconclusive on whether changes in bank exposure towards the domestic sovereign have an adverse effect on the sovereign risk position via a diabolic loop in the sovereign-bank nexus or reduce perceived default risk by acting as a disciplinary device for the sovereign. In this paper we empirically analyze the impact of exogenous changes in bank exposure on the risk position of the sovereign within a Markov switching structural vector autoregressive in heteroscedasticity (MSH-SVAR) framework for a set of EMU countries. We add to the methodological literature by allowing for regime dependent shock transmissions according to the volatility state of the financial system. Finding support for both, a stabilizing and a destabilizing effect, we document a clear clustering among the country sample: Rising bank exposure increased default risk for the EMU periphery, but decreased credit risk for the core EMU countries during times of financial stress

How Should We Bank with Foreigners? - An Empirical Assessment of Lending Behavior of International Banks to Six East Asian Economies

The possible crucial role of international bank lending in transmitting adverse economic disturbance from developed economies to emerging economies in the 2008 - 2009 global financial crisis has placed capital flows into sharper scrutiny in academic and policy discussions. The authors construct macro-and micro-panel data on international bank lending to six Asian economies - Indonesia, the Republic of Korea, Malaysia, Philippines, Singapore, and Thailand - to analyze a number of objectives. The paper first examines the influence of critical determinants not only to overall international bank lending but also to cross-border bank lending, and obtained one finding that cross-border lending by international banks tend to pull out from host economies during difficult times in source economies, whereas such retrenchments are not evident on an aggregated basis. This suggests that encouraging brick-and-mortar affiliates of international banks to "set up shop" in recipient economies may be the judicious choice for these economies. The paper next examines the differences between subsidiaries and branches of international banks in terms of their ability to shield themselves from the financial difficulties of their global parent banks and thus their ability to continue lending in destination markets. The results show that foreign bank subsidiaries are more capable in this regard. This finding carries with it the attraction of favoring an organizational banking structure that is biased toward subsidiaries. However, national banking regulators should remember that apart from encouraging a host of other domestic and cross-border initiatives, encouraging the entry of brick-and-mortar subsidiaries of international banks should not be viewed as a panacea to financial stability concerns of economies in Asia and in emerging markets in general

Explaining varieties of corruption in the Afghan justice sector

© 2015 Taylor & Francis. Judicial reform in Afghanistan is seriously undermined by systemic corruption that has resulted in low legitimacy of the state and weak rule of law. This article reviews the main shortcomings in the Afghan justice system with reference to 70 interviews conducted in Kabul. Building on legal pluralism and a political economic approach, the shortcomings and causes and consequences of corruption in the Afghan justice sector are highlighted. These range from low pay, resulting in bribery; criminal and political intrusion into the judiciary; non-adherence to meritocracy, with poorly educated judges and prosecutors; and low funding in the judicial sector resulting in weak case tracking and human rights abuses in the countryside. This is followed by sociological approaches: understanding corruption from a non-Western approach and emphasis on religion, morality and ethics in order to curb it

Empirical Research on Sovereign Debt and Default

The long history of sovereign debt and the associated enforcement problem have attracted researchers in many fields. In this paper, we survey empirical work by economists, historians, and political scientists. As we review the empirical literature, we emphasize parallel developments in the theory of sovereign debt. One major theme emerges. Although recent research has sought to balance theoretical and empirical considerations, there remains a gap between theories of sovereign debt and the data used to test them. We recommend a number of steps that researchers can take to improve the correspondence between theory and data