Transparency, Liberalization, and Financial Crisis

摘要: Lack of transparency increases the probability a banking crisis following financial liberalization. In country where government policy is not transparent, banks may tend to increase credit above optimal level. Mehrez and Kaufmann investigate how affects crisis. They construct model in which cannot distinguish between aggregate shocks policy, on one hand, firms' quality, other. Banks therefore overestimate returns level that would be given returns. Once discover their large exposure, they are likely roll over loans rather than declare losses. This delays but its magnitude. The empirical evidence, based data for 56 countries 1977-97, supports this theoretical model. authors find lack implies should focus increasing economic activity as well sector, particularly during period transition such paper - product Governance, Regulation, Finance, World Bank Institute part larger effort institute research governance apply findings learning operational programs. (For details, visit www.worldbank.org/wbi/gac.) contacted at gmehrez@worldbank.org or dkaufmann@worldbank.org.