Getting Finance in South Asia 2010
The recent global financial meltdown was a revelation in one sense. Before the crisis there had been a belief that banks could never fail, a belief that encouraged overleveraging and excessive risk taking. The complexity of financial instruments, o...
| Main Authors: | , |
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| Format: | Publication |
| Language: | English |
| Published: |
World Bank
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000333037_20100825235935 http://hdl.handle.net/10986/2498 |
| Summary: | The recent global financial meltdown was
a revelation in one sense. Before the crisis there had been
a belief that banks could never fail, a belief that
encouraged overleveraging and excessive risk taking. The
complexity of financial instruments, opaqueness of
transactions, and sophistication of modeling techniques used
by developed country financial institutions all combined to
conceal the hollowness of their success. Many financial
institutions largely ignored regulatory requirements or
preempted them through the use of complex instruments and
methods, while risk taking caused profits to rocket to
unimaginable levels. Regulatory arbitrage became rampant in
this environment. While financial institutions were in a
mode of overexpansion, regulators visibly failed to enforce
regulations, and the financial institutions took advantage
of the regulatory anarchy. All this was an eye-opener for
regulators in South Asia, as regulatory lapses and lack of
enforcement can lead to potential instability in financial
systems. The report evaluates key prudential guidelines
issued by the regulatory authority of each country to assess
the comparability of data as well as to shed light on the
country's level of regulatory development. It also
expands the group of benchmark economies to allow comparison
with diverse economies in Asia as well as the Western
hemisphere. And it includes a special write-up on how South
Asian countries and commercial banking sectors are managing
the impact of the global financial crisis and economic slowdown. |
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