Financial Institutions and Regulation for Development

Descripción del proyecto

Comprender los retos del sector bancario en los países de renta baja

Las instituciones financieras de los países de renta baja y media afrontan retos que requieren una consideración cuidadosa a la hora de formular normativas financieras y políticas de intervención gubernamental. Comprender estos retos es crucial para fomentar la transformación estructural y el desarrollo. En este contexto, el equipo del proyecto FINDEV, financiado por el CEI, investiga las fricciones económicas que afectan a las instituciones financieras de los países de renta baja y media. Explorará el favoritismo étnico en la banca y evaluará el papel de la independencia de los bancos centrales para abordar esta fricción. Además, en el proyecto se analizará el impacto del conflicto en la organización interna de los bancos y sus efectos en los mercados de préstamos dentro de las sucursales bancarias de Etiopía. Por último, se examinará la puesta en marcha de las primeras sociedades de gestión de activos centradas en los préstamos morosos en China.

Objetivo

This proposal consists of three empirical projects to advance our understanding on the specific conditions and frictions faced by financial institutions operating in low and middle-income countries. Understanding these aspects is crucial to elaborate policies of financial regulation and government intervention that promote structural transformation and development.
1. Ethnic Banking and Central Bank Independence. This project plans to study the political economy frictions behind financial regulation in Africa. Combining bank balance sheets and information on bank chief executive officers (CEOs), we will measure the ethnic connotation of banks and the co-ethnicity between CEOs and regulators. We will investigate the existence of ethnic favoritism in banking, the political use of financial regulation and the role of central bank independence in alleviating this friction.
2. Branch Organization, Multiculturalism and Conflict. Organizations decide their internal hierarchy considering the tradeoff between the use of knowledge and the internal frictions in communication and coordination. These frictions may be particularly high in the presence of a multicultural workforce and if conflict exacerbates within-organization differences. Building new data on hierarchy and management practices among Ethiopian bank branches and an experimental survey of lending discrimination, we plan to study the effect of conflict on the internal organization of banks, their hierarchy and effects on lending markets.
3. Market Incompleteness and Non-Performing Loans (NPLs). Structural transformation implies a move from low to high-productivity sectors. However, incomplete markets prevent banks from selling loans from low-productivity sectors and instead oblige banks to hold NPLs, depressing the financing of structural transformation. This project plans to study the introduction of the first Asset Management Companies focusing on NPL in China, with heterogeneous presence across firms and cities.