State Financial Institutions : Can They Be Relied on to Kick-Start Lending?

The need to kick-start lending to the real sector in response to the global financial crisis is leading many countries to expand the role of state-owned financial institutions. The effectiveness of the support by these institutions depends in large...

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Bibliographic Details
Main Author:	Rudolph, Heinz P.
Format:	Brief
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO FINANCE ACCOUNTABILITY BALANCE SHEETS BANK LENDING BANK MANAGEMENT BANK OF CANADA BANK OF KOREA BANK PRIVATIZATION BANK REGULATION BANKING ASSETS BANKING CRISES BANKING CRISIS BANKING INSTITUTIONS BANKING SUPERVISION BANKING SYSTEMS BASIS POINTS BOARD MEMBERS BONDS BORROWING BUSINESS DEVELOPMENT BUSINESS DEVELOPMENT BANK CAPACITY CONSTRAINTS CAPITAL ALLOCATION CAPITAL INJECTIONS CAPITAL MARKETS CENTRAL BANKS COMMERCIAL BANK COMMERCIAL BANKS COMMERCIAL PAPER CORPORATE GOVERNANCE CORPORATE GOVERNANCE PRINCIPLES CORRUPTION CREDIT ALLOCATION CREDIT CRUNCH CREDIT DECISIONS CREDIT GAP CREDIT GROWTH CREDIT GUARANTEES CREDIT INSTITUTIONS CREDIT RATING CREDIT RATING AGENCY CREDIT SUPPORT DEBT DEGREE OF RISK DEMAND FOR CREDIT DEPOSIT DEPOSITS DEVELOPMENT BANKS DEVELOPMENT FINANCE DEVELOPMENT FINANCE INSTITUTION DEVELOPMENT FINANCE INSTITUTIONS ECONOMIC GROWTH ECONOMIC STABILITY ECONOMICS EMERGING ECONOMIES EMERGING MARKETS ENDOWMENTS EQUITY STAKES EXCHANGE RATE EXPORT FINANCING FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DIFFICULTIES FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL REFORMS FINANCIAL RESOURCES FINANCIAL SUPPORT FINANCIAL SUSTAINABILITY GOOD CORPORATE GOVERNANCE GOVERNANCE ARRANGEMENTS GOVERNMENT FUNDING GOVERNMENT OWNERSHIP GOVERNMENT PAPER GOVERNMENT SUBSIDIES GUARANTEE FUND HOUSEHOLDS IDLE CAPACITY IMPLICIT GOVERNMENT GUARANTEE IMPLICIT GUARANTEE INCORPORATED INDIVIDUALS INSURANCE INSURANCE PRODUCTS INTEREST RATE INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS ISSUANCE LACK OF FINANCE LACK OF TRANSPARENCY LARGE COMPANIES LENDER LENDER OF LAST RESORT LENDING BEHAVIOR LIMITED LINES OF CREDIT LIQUIDITY LIQUIDITY PROBLEMS LOAN LOAN PORTFOLIOS LONG-TERM COSTS LONG-TERM LOANS MANAGERS MANDATES MARKET DISCIPLINE MARKET FAILURE MARKET FAILURES MARKET PARTICIPANTS MARKET PLAYERS MARKET SHARE MONETARY POLICY OPERATIONAL COSTS PAYMENT SYSTEM POLICY RESPONSE POLICY RESPONSES POLITICAL ECONOMY POLITICAL PARTY POOR CREDIT PRICING POLICIES PRIVATE BANKS PRIVATE COMMERCIAL BANKS PRODUCTIVITY PROFITABILITY PRUDENTIAL REGULATION PUBLIC COMPANIES PUBLIC DEBT PUBLIC DEBT MARKETS PUBLIC POLICY RATE OF RETURN REAL SECTOR RECAPITALIZATION RECESSION RECESSIONS REGULATORY FORBEARANCE REGULATORY REFORM RETURN RETURNS RISK AVERSION RISK MANAGEMENT RISK MANAGEMENT STRATEGIES RISK MANAGEMENT SYSTEMS SAFER ASSETS SAVINGS SHAREHOLDERS SHORT-TERM LIQUIDITY STAKEHOLDERS STATE BANKS STATE GUARANTEE SYSTEMIC RISK TECHNICAL ASSISTANCE TIER 1 CAPITAL TRADE FINANCE WRITTEN RECORD
Online Access:	http://documents.worldbank.org/curated/en/2010/01/12041664/state-financial-institutions-can-relied-kick-start-lending http://hdl.handle.net/10986/10216

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Summary:	The need to kick-start lending to the real sector in response to the global financial crisis is leading many countries to expand the role of state-owned financial institutions. The effectiveness of the support by these institutions depends in large part on the nature of the shock, on their ability to leverage private commercial banks to scale up their impact, and on the existence of a sound institutional framework. While it is too early to evaluate their effectiveness, past experience with the use of such institutions is sobering. Whether countries will heed the les sons of this experience remains to be seen.

State Financial Institutions : Can They Be Relied on to Kick-Start Lending?

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