Abstract

As was the case in 1995, the performance of commercial banks in industrial countries differed markedly in 1996 between countries, depending upon their relative position in the credit cycle. For banks in Canada, the United Kingdom, and the United States, which had resolved their asset-quality problems relatively quickly in the early 1990s, profitability and capitalization levels remained at or near historic highs, with non performing loan ratios at correspondingly low levels. For banks in France, Italy, and Japan, performance has lagged, although the worst of the asset-quality difficulties appears to be past. The overall condition of the banking systems in these countries has improved, but differences between stronger and weaker institutions have sharpened. Emphasis is increasingly placed on the resolution of serious problems in individual institutions and on the longer-term structural issues that confront the industry, such as the effects of EMU on competition within European banking systems, discussed in Chapter III.

Industrial Countries

As was the case in 1995, the performance of commercial banks in industrial countries differed markedly in 1996 between countries, depending upon their relative position in the credit cycle. For banks in Canada, the United Kingdom, and the United States, which had resolved their asset-quality problems relatively quickly in the early 1990s, profitability and capitalization levels remained at or near historic highs, with non performing loan ratios at correspondingly low levels. For banks in France, Italy, and Japan, performance has lagged, although the worst of the asset-quality difficulties appears to be past. The overall condition of the banking systems in these countries has improved, but differences between stronger and weaker institutions have sharpened. Emphasis is increasingly placed on the resolution of serious problems in individual institutions and on the longer-term structural issues that confront the industry, such as the effects of EMU on competition within European banking systems, discussed in Chapter III.

Banks in Canada, the United Kingdom, and the United States again led the major industrial country banks in terms of profitability and asset quality in 1996.35 Net income increased in all three banking systems, reaching an average return on equity of 15 percent in Canada, 19 percent in the United Kingdom, and 14 percent in the United States. These profits were earned despite a narrowing of net interest margins in each country and reflected an increase in noninterest earnings and a decline in loan loss provisions and write-offs. Asset quality remains strong, with the ratio of nonperforming loans to gross loans falling to historic lows in the United States (1 percent) and Canada (0.6 percent) and also to a very low level in the United Kingdom (2.5 percent). In addition, reserve coverage for current nonperforming loans appears to be more than adequate, with coverage ratios well in excess of 100 percent in Canada and the United States, and approaching that level for some of the banks in the United Kingdom. The peak in asset quality, however, may have passed. Banks have expanded their consumer lending and other high-margin lending in order to compensate for declining margins on corporate loans, but in each country the quality of the consumer loan portfolio declined in 1996. Finally, the banks’ capital ratios remain strong. At end-1996, Canadian banks had an average total risk-weighted capital ratio of 9 percent; U.K. banks’ capital ratios averaged II percent; and U.S. banks’ core capital ratio was almost 8 percent. These high capital levels were achieved despite significant volumes of share repurchases in all three countries, financed in part in the United States by issues of tax-exempt, trust-preferred securities that are eligible as Tier I capital under U.S. bank capital adequacy regulations.

The regulatory environment for banks in the United States has allowed a significant broadening of commercial banks’ involvement in the securities and insurance businesses, and both the Federal Reserve Board and the U.S. Department of the Treasury have proposed repealing the Glass-Steagall Act’s restrictions on affiliations between banks and securities dealers. The structure of financial supervision and regulation is also being reconsidered in the United Kingdom. The U.K. government has proposed to integrate all financial supervisory and regulatory authority, including that over banks currently exercised by the Bank of England, in the Securities and Investments Board. Such a consolidation of supervisory authority in one agency is occurring in response to the emergence of a unified financial services industry and is being incorporated in the regulatory structure in an increasing number of countries, including Japan.

Unlike banks in many other countries, German banks have not experienced a significant deterioration in asset quality in recent years. The five largest private banks reported a 19 percent increase in net income in 1996 (for a return on equity of 10 percent) due mainly to a sharp rise in noninterest income. The banking sectors in France and Italy, however, showed another year of moderate earnings on loan portfolios. For the first time in six years, all of the seven major banks in France reported positive net profits for 1996—earning a return on equity of 8 percent—owing mainly to exceptionally high income from capital market activities and from lower loan loss provisions. The same factors contributed to a 7 percent increase in operating profits for Italian banks. In both countries, banking operations continue to be affected by weak loan demand, narrowing interest margins due to aggressive competition and increasing disintermediation, and poor asset quality. The French and Italian authorities continue to provide support to individual institutions with serious asset-quality difficulties, which has translated into an increasingly large amount of contingent liabilities, albeit with limited immediate budgetary impact. Nevertheless, it is generally believed that the worst of the asset-quality difficulties in France and for the Italian banks in the center-north of the country are past. The banks are now reasonably well capitalized, with total risk-weighted capita) ratios of between 8.7 percent and 11.4 percent for the major banks in France and 1.3 percent for banks in Italy. Several banks in southern Italy, however, continue to struggle with worsening asset quality. The ratio of bad loans to total loans in the region has been in excess of 20 percent with a rising fraction estimated to be irrecoverable. Countrywide, the stock of bad loans reached 10 percent of total loans at end-1996, up from 9 percent at end-1995, and the estimated loss rate increased to 38 percent from 33 percent at end-1995. However, the percentage of loans granted to firms considered to be at risk has decreased across sectors and regions, thus slowing down the growth in the ratio of bad loans to total loans.

The banking crisis in Japan continues to move toward a resolution. In the 1996/97 fiscal year, the 20 major banks again set aside loan loss provisions far in excess of operating profit, financed by realizing net gains on their equity investments. At the end of March 1997, aggregate nonperforming loans (loans to bankrupt borrowers and loans that were six months or more past due) were ¥13.2 trillion, essentially unchanged from a year earlier. However, total problem loans, including loans restructured at interest rates below the official discount rate and loans made to support customers, fell significantly, from ¥26 trillion to ¥19 trillion; net of specific reserves, problem loans fell from 4 percent of gross loans to 3 percent.

Although the definition of problem loans has been gradually widened in the last two years, it is still less comprehensive than, for example, U.S. bank supervisory definitions. The Japanese definition does not include loans that are past due for 90–180 days, loans that have been sold to the Cooperative Credit Purchasing Company (CCPC), special-purpose vehicles, or other affiliates, or loans restructured at interest rates above the official discount rate. Many of these loans would likely be considered nonperforming loans under U.S. practices. Applying a broader definition of nonperforming loans to the Japanese banks would yield an estimate for aggregate problem loans somewhat higher than the official estimate. Of course, the ultimate losses that the banks are likely to sustain are much smaller than the stock of problem loans, and depend upon the probability of default and the value of the collateral that is recovered.36

The decline in interest rates in Japan since 1995 has been beneficial to the banks. As interest rates fell, banks earned large returns on their bond portfolios, trading activities, and loan spreads, all of which contributed to very high pre-provision income. Furthermore, at current interest rates, the yield difference between a performing loan and a nonperforming loan is relatively small, so the bad loans have not depressed earnings or capital as much as they would have if interest rates were higher. The benefits to the banks of low interest rates are believed by many market participants to have been among the factors that have influenced the Bank of Japan’s interest rate policy—-since the banks have positioned themselves to benefit from a steep yield curve, an increase in short-term interest rates might reduce cash flows, with the magnitude and timing varying among banks depending upon the structure of their portfolios. This concern is reinforced by the banks’ underlying weak profitability compared with banks in other industrial countries. During 1985–94, the average pre-provision return on assets for Japanese banks was 0.5 percent, compared with about 1.7 percent for Canadian, U.K., and U.S. banks. Even if all of their operating costs were eliminated, Japanese commercial banks would have earned a return on assets of only 1.4 percent.

During 1996, the Japanese authorities adopted a U.S.-style bank resolution framework built around (1) increased powers for regulators to intervene in problem banks, including declaring them insolvent; (2) prompt corrective action (PCA) measures for intervening in weak banks and maintaining a sound financial system; and (3) increased resources for the deposit insurance corporation, including a special premium to finance insurance coverage of deposits in excess of the statutory limit until end-March 2001. The prompt corrective action measures, which take effect April I, 1998, require banks to classify their loan portfolios rigorously and to allow the authorities to force them to take corrective measures or ultimately to close them if their risk-weighted capital ratios fall below certain thresholds. A change in the structure of financial supervision has also been initiated. The Japanese Ministry of Finance’s responsibilities in the area of bank supervision will be moved to an independent agency, the Supervisory Agency for Financial Entities, which will also exercise surveillance over securities firms, but the ministry will continue to be responsible for setting bank regulations, and the Bank of Japan will retain its bank examination powers.

A far-reaching set of financial reforms, described as Japan’s “Big Bang,” announced in November 1996, includes (1) the elimination of most remaining foreign exchange controls and ex ante reporting requirements, and the abolition of the authorized foreign exchange bank system; (2) the acceptance of financial holding companies; (3) the abolition of fixed commissions on securities transactions; and (4) the elimination of restrictions segregating securities, trust, and banking activities. The first measure is the central element of the reform plan, as increased foreign competition is expected to force domestic firms to be more innovative and more efficient and to provide better services and higher returns to retail investors, who are often perceived to be ill served under current financial market practices. The latter three measures are expected to lead to some restructuring and consolidation of the financial services industry, since they allow financial holding companies—combining all types of banking and securities activities—to be established, while at the same time making each type of activity more competitive and responsive to market forces.

Banking System Developments in Emerging Markets

Developments in the major emerging market banking systems were influenced in 199b by the differing patterns of economic performance across regions. The economic recoveries in Latin America allowed banking systems to continue the necessary structural reforms and reorganizations in a less crisis-charged environment. In Asia, lower growth and exports, and weaknesses in property markets, had serious repercussions in some emerging market financial systems, because these conditions uncovered underlying problems—illiquidity and heavy net foreign currency liabilities of the corporate sectors—and directly affected banks’ overall asset quality. In many emerging markets, existing measures of asset quality are based on weak accounting practices that do not provide accurate estimates of the true value of loan portfolios. In addition, off-balance-sheet operations, particularly in derivatives, often escape regulatory oversight and can substantially change banks’ exposure to different risks.

The growing awareness that an unsound, inadequately regulated financial system can severely disrupt macroeconomic policy and performance led to a broad-based international effort to promote the soundness and stability of financial systems in emerging markets. The relevant international financial institutions and official groupings responded to these concerns by elucidating the general principles of a sound financial system. The Basle Committee on Banking Supervision published its consultative paper. Core Principles for Effective Banking Supervision, in April 1997, and the G-10 Working Party on Financial Stability in Emerging Market Economies also released its paper. Financial Stability in Emerging Market Economies, in the same month. The latter report called for a “concerted international strategy to promote the establishment, adoption and implementation of sound principles and practices needed for financial stability” in emerging markets and proposed a strategy in which, following the development of an international consensus on what constitutes a sound financial system, the IMF and other multilateral institutions would promote the adoption and implementation of these principles and practices. An early proponent of such an effort, Goldstein (1997), has called for the establishment of International Banking Standards, based on the principles developed by the international agencies, to which bank supervisors in emerging markets would voluntarily adhere.

Asia

Korea’s membership in the OECD in 1996 and its commitment to further capital account liberalization lowered funding costs but also increased potential vulnerabilities from foreign competition and surges in capital flows. At present, however, the main risks to the banking system derive from the past practice of government intervention in banks’ credit allocation decisions and the resulting large exposures to individual borrowers or high-risk sectors. The lack of a well-developed credit culture within banks and the emphasis on collateral, rather than credit evaluation, have also contributed to a worsening of asset quality as liquidity problems among the large corporations intensified in 1996.37 While the official estimate of nonperforming loans (defined as loans that are unrecoverable and loans that are six months or more past due) is only about I percent of total loans, the Presidential Commission on Financial Reform estimated in April 1997 that under a broader definition, problem loans among the six largest commercial banks amounted to 5 percent of total loans. In addition to declining loan quality, the banks have had to deal with a decline in Korean equity prices in 1996, which produced large revaluation losses on their equity portfolios.

The authorities have responded to the declining asset quality and the losses on banks’ equity portfolios in 1996 by tightening bank supervision, including a recent proposal to create a Finance Supervisory Board, uniting supervision of banks, securities companies, and insurance companies in one agency. However, the authorities have also engaged in some regulatory forbearance. The loan loss provisioning requirement for doubtful loans was lowered to 75 percent from 100 percent, and the banks were allowed to provide for only 30 percent of the securities revaluation losses in 1996, rather than 50 percent as had previously been required. Despite these measures, the leading commercial banks reported a slight decline in net income in 1996.

A surge in capital inflows into the Philippines since 1991–92 has contributed to a sharp increase in equity and property prices and in liquidity in the banking system, which have fueled a rapid expansion in bank lending—42 percent a year during the last two years. These increases in asset prices and lending have raised concerns about asset quality, in part because a significant portion of the new lending has been to the consumer sector, which tends to have a relatively high loss rate, and because commercial banks in the Philippines have a high exposure to the property sector. The Central Bank of the Philippines estimated that commercial banks’ property loans accounted for 10 percent of total loans at end-1996. However, the true exposure may be higher since property is a common form of loan collateral, and some of the banks have other stakes in property developers. In April 1997 the central bank limited real estate loans to 20 percent of a bank’s total loans and lowered the allowed loan-to-value ratio, in an attempt to limit the system’s exposure to that sector.

As is the case elsewhere in the region, foreign currency exposure has been increasing in the Philippines. Banks have borrowed in foreign currency to finance domestic lending, and their net foreign liabilities increased to $6 billion at end-1996 (9 percent of total liabilities plus capital) from a nearly balanced position at end-1995. Prudential regulations require banks to limit their foreign exchange exposure to 15 percent of capital. Foreign-currency-denominated lending from the banks’ Foreign Currency Deposit Units (FCDUs) has also expanded rapidly—by 110 percent in 1996. While banks are required to maintain balanced FCDU books, the currency risk is borne by borrowers, some of whom may experience difficulties in servicing the loan if the peso depreciates or export revenues decline. To reduce the potential vulnerability of the banking system to foreign exchange risk, the central bank introduced a 30 percent liquidity requirement on foreign-currency-denominated assets in June 1997.

The exposure of the Thai corporate and financial sectors to foreign exchange risk is widely believed by market participants to have influenced the authorities’ exchange rate policy. At the same time, the strength of the baht and the high interest rates needed to maintain the exchange rate, combined with a deteriorating property market, contributed to an increase in nonperforming loans from 7 percent of loans at end-1995 to 8 percent at end-June 1996. While banks are believed to have hedged most of their net foreign liabilities, the opposite is believed to be true for the corporate sector. The combination of a stable exchange rate and a wide differential between foreign and (much higher) domestic interest rates provided a strong incentive for firms to take on foreign currency liabilities, until doubts about the sustainability of the exchange rate strengthened in July 1996. Hence, in addition to their own foreign exchange exposure, banks may have a large indirect exposure in the form of credit risk to firms that have borrowed in foreign currencies.

The property market in Thailand has been an important source of loan losses both because banks have lent to this sector and because property has often been used as collateral for loans. The vacancy rate on prime office space in Bangkok was 14 percent in March 1997, and the availability of office space is due to increase sharply in 1997-99. In addition, asset quality in the rapidly built-up consumer lending portfolio and in the general corporate lending business has deteriorated.

The official response to the latest concerns about the health of the financial system has focused on improving accounting and disclosure of asset quality and on rehabilitating the property market and the finance company sector. Banks are required to begin disclosing nonperforming loans and provisions with their June 1997 financial statements, and they are required to have set aside additional reserves equal to 15 percent of substandard loans by end-June 1999. The authorities have also introduced measures to support the property market, including the establishment in March 1997 of the Property Loan Management Organization (PLMO). The PLMO was capitalized with B 1 billion from the fiscal budget and authorized to borrow up to B 100 billion to finance the purchase of property-related loans from banks. The authorities have also established a secondary mortgage corporation and have permitted the securitization of financial assets.

The Thai authorities moved resolutely to deal with weak finance companies in late June 1997. The Ministry of Finance ordered 16 finance companies to suspend operations for 30 days and required them to submit, within 14 days, rehabilitation plans involving injections of capital from domestic or foreign investors. Five large and stable finance companies agreed to acquire the net assets of those of the 16 companies that are unable to recapitalize themselves. The Bank of Thailand will provide up to five new banking licenses to such merged entities subject to a minimum size requirement. Promissory notes issued by failed institutions will be rescheduled, while those of the 75 healthy finance companies can be converted to bank certificates of deposits at the investor’s discretion. In addition, the Bank of Thailand has temporarily capped deposit rates of finance companies at 14 percent, and those of commercial banks at 12 percent.

Latin America

The economic recovery in Argentina continued in 1996 and resulted in a reflow of deposits back into the banking system, which allowed interest rates to ease and boosted lending activity. Nevertheless, net income for the 20 largest banks rose only marginally, and the return on average equity declined slightly to just below 7 percent. The restructuring of the banking system continued in 1996—three private banks were taken over and two others had their licenses revoked—and further consolidation is expected, including privatization and foreign investment in the banking system. This process is supported by the authorities, who modified the role of the deposit insurance fund in 1996 to allow it to assist in the acquisition or merger of banks.

Profitability continued to worsen among a sample including the 50 largest banks in Brazil because of a sharp decline in the net interest margin and a rise in administrative costs and despite an increase in noninterest income. With interest rates and margins declining, the banks included in the sample invested a greater share of their assets in investment and trading securities and less in loans—the ratio of securities and short-term investments to loans and advances exceeded 110 percent at end-1996, compared with 77 percent a year earlier. This move away from lending and toward securities investment and trading occurred while average asset quality in the banking system continued to decline. At end-1996, loans in arrears and nonperforming loans accounted for 14 percent of total loans of active commercial banks, up from 7 percent at end-1994.

In Argentina and Brazil, as well as elsewhere, the banking systems are segmented by performance and asset quality between government-owned banks and private banks. In Argentina, the ratio of loans past due more than 90 days to total loans was 19 percent for the federally owned banks at end-September 1996, 27 percent for the provincial banks, and 9 percent for the domestic private banks. The return on average equity for the government-owned banks was only 4 percent in 1996, compared with 11 percent for the large private banks. Similarly, in Brazil, while 14 percent of the financial system’s loans were in arrears or liquidation at end-1996, the figure for the 21 largest private banks was only about 2 percent and that for 28 smaller private banks was about 5 percent, leaving the government-owned banks with the lion’s share of bad loans. Such problems are illustrated by the R$12 billion in losses incurred by Banco do Brazil over 1995-96, due mainly to more rigorous criteria for classifying nonperforming loans, that led to increasing loan loss provision and weakening income. In April 1996, the government announced a recapitalization plan under which it eventually provided R$6.8 billion. In August 1996, the federal and state governments agreed to reschedule the stales’ debts in return for which the state banks would be privatized, liquidated, or transformed into development agencies.

Notwithstanding the improvement in the economy, banks in Mexico continued to struggle in 1996 with deteriorating asset quality. The commercial banking system, excluding banks that were under central bank intervention or in other special situations, recorded an aggregate net loss of MexN$7 billion (11 percent of equity) in 1996, after a profit of MexN$2.5 billion in 1995. The net interest margin fell to 4 percent from 6 percent in 1995, because of a decline in interest rates and an increase in nonperforming or low-yielding assets on the banks’ balance sheets. Non-performing loans increased by MexN$1.2 billion (2.5 percent) in 1996, despite the sale of MexN$124 billion in (mostly nonperforming) loans by the banks to FOBAPROA,38 and at the end of the year they equaled 7 percent of loans, compared with 8 percent at end-1995. Since January 1, 1997, the accounting rules for asset quality have been significantly tightened with the application of accounting principles closer to those used in the United States. Under the new accounting principles, at the end of 1996, 12.2 percent of loans were nonperforming.

Despite the still-growing stock of nonperforming loans, the recapitalization commitments obtained in return for the loan sales to FOBAPROA have resulted in an increase in the ratio of equity to nonperforming loans to 149 percent at end-1996 from 137 percent a year earlier. However, of the total equity of MexN$70 billion at end-1996, only just under half (MexN$32 billion) was paid-up capital. Revaluation gains on equity and fixed assets contributed almost as much (MexN$25 billion), making the true capitalization of the system partially dependent upon asset market developments and property valuations.

The banking system in Venezuela began to recover in 1996 after two difficult years, in which 17 banks holding 54 percent of end-1993 deposits were closed or taken over by the deposit-guarantee fund, FOGADE,39 at a total cost of 30 percent of 1994 GDP. The 13 largest Venezuelan banks’ net income increased by a factor of three in 1996, owing mostly to higher net interest earnings from lending—loans increased by more than 80 percent in 1996—income from securities holdings, and profits from long dollar positions held at the time of the devaluation of the bolivar in April 1996. Asset quality also improved in 1996. At the end of the year, banks reported that 4 percent of gross loans were past due or in litigation, with a reserve coverage ratio of nearly 200 percent, compared with ratios of 10 percent and 121 percent, respectively, in 1995. The Venezuelan banks are similarly well capitalized. As a result of capital injections by FOGADE and bank shareholders, the equity-assets ratio has increased to 13 percent, from 8 percent at end-1994.

The immediate future for the Venezuelan banking system will be strongly influenced by the sudden emergence of foreign competition. After 1975 foreign banks were not permitted in Venezuela, but that ended in December 1996, when foreign financial institutions acquired controlling stakes in three of the four largest Venezuelan banks—two of which were acquired in privatizations. The foreign banks’ more advanced practices (including technology), broader range of products, and deeper capital base will put pressure on the other Venezuelan banks to modernize and become more efficient and may lead to further consolidation in the industry.

Eastern Europe and Africa

In the Czech Republic, eight banks, including the fifth largest, were subject to intervention by the Czech National Bank in 1996, although in most cases the authorities had been preparing for this move for a number of years. At end-September 1996, 33 percent of credit was still classified below normal but the incidence of nonperforming loans actually declined over the previous year’s figures. The larger banks especially have investment grade ratings and are generally believed to be fully reserved against their nonperforming loans, which are declining. Nevertheless, the provisioning needed to meet the required coverage ratio has consumed about a third of operating income in recent years.

Commercial banks in South Africa continued their recent pattern of high profitability and strong capitalization in 1996, with an aggregate risk-weighted capital ratio of about 10 percent. Although asset quality declined slightly, the incidence of nonperforming loans remains low and adequately reserved. Overdue loans rose by 17 percent in 1996 but represented only 3 percent of total loans at the end of the year, marginally lower than the previous year-end ratio. After more than a decade of near isolation, the South African banking system has become highly concentrated (the four largest banks hold about 85 percent of industry assets) and heavily exposed to the domestic corporate conglomerates (large credit exposures granted accounted for 1,033 percent of capital and reserves). Both forms of concentration have contributed to the relatively high profits of the banks, and both are likely to come under pressure from the liberalization of foreign capital flows, which will increase the level of competition from foreign banks and capital markets, a process that has already begun. In addition, the ongoing liberalization and development of domestic capital markets are likely to increase the pace of disintermediation. These two forces will induce South African banks to become more cost efficient and will require the bank supervision authorities to monitor the asset quality closely if banks increase their lending to riskier borrowers in search of higher yields.

Developments, Prospects, and Key Policy Issues 1997
  • Agénor, Pierre-Richard, 1996, “The Surge in Capital Flows: Analysis of ‘Pull’ and ‘Push’ Factors” (unpublished; International Monetary Fund) (forthcoming in International Journal of Finance and Economics).

    • Search Google Scholar
    • Export Citation
  • Agénor, Pierre-Richard, Jagdeep Bhandari, and Robert P. Flood, 1992, “Speculative Attacks and Models of Balance of Payments Crises,” Staff Papers, Vol. 39 (Washington: International Monetary Fund, June), pp. 35794.

    • Search Google Scholar
    • Export Citation
  • Aoki, Masahiko, ed., 1984, The Economic Analysis of the Japanese Firm (NewYork: North-Holland).

  • Artis, Michael J., and Mark P. Taylor, 1990, “Abolishing Exchange Control: The U.K. Experience,” in Private Behaviour and Government Policy in Interdependent Economies, ed. by Anthony S. Courakis and Mark P. Taylor (Oxford: Clarendon Press).

    • Search Google Scholar
    • Export Citation
  • Artis, Michael J., and Mark P. Taylor, 1994, “The Stabilizing Effect of ERM on Exchange Rates and Interest Rates: Some Nonparametric Tests,” Staff Papers, International Monetary Fund, Vol. 41 (March), pp. 12348.

    • Search Google Scholar
    • Export Citation
  • Bank for International Settlements, 1996a, Annual Report (Basle).

  • Bank for International Settlements, 1996b, 1997, International Banking and Financial Market Developments (Basle).

  • Bank for International Settlements, 1996c, “Financial Market Volatility: Measurement, Causes, and Consequences,” Conference Paper No. 1. (Basle).

    • Search Google Scholar
    • Export Citation
  • Bank for International Settlements, 1996d, Settlement Risk in Foreign Exchange Transactions, Committee on Payment and Settlement Systems No. 17 (Basle).

    • Search Google Scholar
    • Export Citation
  • Bank of England, 1996, Practical Issues Arising from the Introduction of the Euro, Issues 1–3 (London, April).

  • Barth, James R., Daniel E. Nolle, and Tara N. Rice, 1997, “Commercial Banking Structure, Regulation, and Performance: An International Comparison,” Economics Working Paper 97–6, Office of the Comptroller of the Currency (Washington).

    • Search Google Scholar
    • Export Citation
  • Bartolini, Leonardo, and Allan Drazen, 1997, “When Liberal Policies Reflect External Shocks, What Do We Learn?” Journal of International Economics, Vol. 42 (May), pp. 24973.

    • Search Google Scholar
    • Export Citation
  • Basle Committee on Banking Supervision, 1997, Core Principles for Effective Banking Supervision (Basle: Bank for International Settlements, April).

    • Search Google Scholar
    • Export Citation
  • Bayoumi, Tamim, 1989, “Saving-Investment Correlations: Immobile Capital, Government Policy, or Endogenous Behavior?” IMF Working Paper 89/66 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Bayoumi, Tamim, Morris Goldstein, and Geoffrey Woglom, 1995, “Do Credit Markets Discipline Sovereign Borrowers? Evidence from U.S. States,” Journal of Money, Credit, and Banking, Vol. 27, Pt. I (November), pp. 104659.

    • Search Google Scholar
    • Export Citation
  • Berger, Allen N., and David B. Humphrey, 1997, “Efficiency of Financial Institutions: International Survey and Directions for Future Research,” Finance and Economics Discussion Series No. 1997–11 (Washington: Board of Governors of the Federal Reserve System).

    • Search Google Scholar
    • Export Citation
  • Bergsten, C. Fred, 1997, “The Impact of the Euro on Exchange Rates and International Policy Cooperation,” in EMU and the International Monetary System, ed. by P. Masson, T. Krueger, and B. Turtleboom (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Bianco, Magda, Andrea Gerali, and Riccardo Massaro, 1996, “Financial Systems Across ‘Developed Economies’: Convergence or Path Dependence?” (unpublished; Rome: Bank of Italy).

    • Search Google Scholar
    • Export Citation
  • Bishop, Graham, 1997, “The European Central Bank and the Prudential Regulation of the Financial System,” paper presented at a conference on the “Monetary, Fiscal and Financial Implications of European Monetary Union,” European University Institute, Florence, June 1997.

    • Search Google Scholar
    • Export Citation
  • Black, Fischer, and Myron J. Scholes, 1973, “The Pricing of Options and Corporate Liabilities,” Journal of Political Economy, Vol. 81 (May/June), pp. 63754.

    • Search Google Scholar
    • Export Citation
  • Blanco, Herminio, and Peter M. Garber, 1986, “Recurrent Devaluation and Speculative Attacks on the Mexican Peso,” Journal of Political Economy, Vol. 94 (February), pp. 14866.

    • Search Google Scholar
    • Export Citation
  • Bloomberg Business News, 1997, “U.S. Economy: Greenspan Says U.S. Stocks ‘Not Unreasonable,’” March 5.

  • Bloomfield, Arthur I., 1963, “Short-Term Capital Movements Under the Pre-1914 Gold Standard,” Princeton Studies in International Finance, No. 11 (Princeton, New Jersey).

    • Search Google Scholar
    • Export Citation
  • Bloomfield, Arthur I., 1968, “Patterns of Fluctuation in International Investment Before 1914,” Princeton Studies in International Finance, No. 21 (Princeton, New Jersey).

    • Search Google Scholar
    • Export Citation
  • Board of Governors of the Federal Reserve System, 1984, “The Federal Reserve Position on Restructuring of Financial Regulation Responsibilities,” Federal Reserve Bulletin (Washington, July), pp. 54857.

    • Search Google Scholar
    • Export Citation
  • Board of Governors of the Federal Reserve System, 1997, “Family Finances in the United States: Recent Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin (Washington, January).

    • Search Google Scholar
    • Export Citation
  • Bodart, Vincent, and Paul Reding, 1996, “Exchange Rate Regime, Volatility, and International Correlations on Bond and Stock Markets” (unpublished; Namur, Belgium: Department of Economics, University of Namur).

    • Search Google Scholar
    • Export Citation
  • Bolton, Patrick, and Ernst-Ludwig von Thadden, 1996, “Blocks, Liquidity, and Corporate Control,” London School of Economics Financial Markets Group Discussion Paper No. 249 (October).

    • Search Google Scholar
    • Export Citation
  • Bordo, Michael, and Anna J. Schwartz, 1996, “Why Clashes Between Internal and External Stability Goals End in Currency Crises, 1797–1994,” NBER Working Paper No. 5710 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Borio, Claudio, 1997, “Monetary Policy Operating Procedures in Industrial Countries,” BIS Conference Paper No. 3 (Basle: Bank for International Settlements).

    • Search Google Scholar
    • Export Citation
  • Bridgewater Associates, 1997a, “Turning Apples into Oranges—Unlocking the Mystery of Market Segmentation of Bradys and Euros,” Bridgewater Daily Observations, January 20.

    • Search Google Scholar
    • Export Citation
  • Bridgewater Associates 1997b, “Earnings Expectations for U.S. Equities,” Bridgewater Daily Observations, March 11.

  • Bridgewater Associates, 1997c, “Equity Mutual Fund Activity,” Bridgewater Daily Observations, April 16.

  • BZW Securities Limited, 1997, Global Markets Digest Q1 1997 (London, January).

  • Cairncross, Alec K., 1953, Home and Foreign Investment 1870–1913: Studies in Capital Accumulation (London: Cambridge University Press).

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo A., 1995, “Varieties of Capital-Market Crises,” IMF Seminar Series, No. 1995–03 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo A., Leonardo Leiderman, and Carmen M. Reinhart, 1993, “Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors,” Staff Papers, International Monetary Fund, Vol. 40 (March), pp. 10851.

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo A., 1996, “Inflows of Capital to Developing Countries in the 1990s,” Journal of Economic Perspectives, Vol. 10 (Spring), pp. 12339.

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo A., and Morris Goldstein, 1996, “What Role for the Official Sector?” in Private Capital Flows to Emerging Markets After the Mexican Crisis, ed. by G.A. Calvo, M. Goldstein, and E. Hochreiter (Washington: Institute of International Economics).

    • Search Google Scholar
    • Export Citation
  • Caprio, Gerard, and Daniela Klingebiel, 1997, “Bank Insolvency: Bad Luck, Bad Policy, or Bad Banking?” in Annual World Bank Conference on Development Economics 1996, ed. by M. Bruno and B. Pleskovic (Washington), pp. 79104.

    • Search Google Scholar
    • Export Citation
  • Cardoso, Eliana, and Rudiger Dornbusch, 1989, “Foreign Private Capital Flows,” in Handbook of Development Economics, Vol. 2, ed. by Hollis Chenery and T.N. Srinivasan (Amsterdam; New York: North Holland).

    • Search Google Scholar
    • Export Citation
  • Cassard, Marcel, and David Folkerts-Landau, forthcoming, “Risk Management of Sovereign Assets and Liabilities,” IMF Working Paper (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Christoffersen, Peter, Guay Lim, and Garry Schinasi, 1997, “Using Asset Prices to Assess Inflationary Pressures: Constructing a Broad-Based Price Measure for Japan, 1970–96” (unpublished; Washington: Research Department, International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Claessens, Stijn, Michael P. Dooley, and Andrew Warner, 1995, “Portfolio Capital Flows: Hot or Cold?” World Bank Economic Review, Vol. 9 (January), pp. 15374.

    • Search Google Scholar
    • Export Citation
  • Cole, Harold L., and Timothy J. Kehoe, 1996, “A Self-Fulfilling Model of Mexico’s 1994–95 Debt Crisis,” Journal of International Economics, Vol. 41 (November), pp. 30930.

    • Search Google Scholar
    • Export Citation
  • Commission of the European Communities, 1988a, “The Economics of 1992,” European Economy, Vol. 35 (March), pp. 8695, 17197.

  • Commission of the European Communities, 1988b, “Annual Economic Report 1988–1989,” European Economy, Vol. 38 (November), pp. 79, 13741.

    • Search Google Scholar
    • Export Citation
  • Cumby, Robert E., and Sweder van Wijnbergen, 1989, “Financial Policy and Speculative Runs with a Crawling Peg: Argentina 1979–81,” Journal of International Economics, Vol. 27 (August), pp. 11127.

    • Search Google Scholar
    • Export Citation
  • Deutsche Bank Research, 1996, “EMU and Financial Markets—Some Issues and Prospects,” EMU Watch, No. 22, December 9.

  • Deutsche Bundesbank, Kapital Markt Statistik (Frankfurt, various issues).

  • Diamond, Douglas W., 1984, “Financial Intermediation and Delegated Monitoring,” Review of Economic Studies, Vol. 51 (July), pp. 393414.

    • Search Google Scholar
    • Export Citation
  • Dooley, Michael P., 1986, “Country-Specific Risk Premiums, Capital Flight and Net Investment Income Payments in Selected Developing Countries,” DM/86/17 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Dooley, Michael P., 1997, “Profitable Speculation and Monetary Unions,” paper presented at a conference on the “Monetary, Fiscal, and Financial Implications of European Monetary Union,” European University Institute, Florence, June.

    • Search Google Scholar
    • Export Citation
  • Dooley, Michael P., forthcoming, “Governments’ Debt and Asset Management and Financial Crises: Sellers Beware,” in Risk Management for Sovereign Countries (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Dooley, Michael P., Donald J. Mathieson, and Liliana Rojas-Suárez, 1996, “Capital Mobility and Exchange Market Intervention in Developing Countries,” WP/96/131 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Drudi, Francesco, and Alessandro Prati, 1997, “Differences and Analogies Between Index-Linked and Foreign-Currency Bonds: A Theoretical and Empirical Analysis,” in Managing Public Debt: Index-Linked Bonds in Theory and Practice, ed. by Marcello De Cecco, Lorenzo Pecchi, and Gustavo Piga (Cheltenham, United Kingdom; Brookfield, Vermont: Edward Elgar), pp. 195216.

    • Search Google Scholar
    • Export Citation
  • Dunning, John H., 1970, Studies in International Investment (London: Allen & Unwin).

  • Eaker, Mark, Dwight Grant, and Nelson Woodard, 1993, “A Multinational Examination of International Equity and Bond Investment with Currency Hedging,” Journal of Futures Markets, Vol. 13, (May), pp. 31324.

    • Search Google Scholar
    • Export Citation
  • Edelstein, Michael, 1982, Overseas Investment in the Age of High Imperialism: The United Kingdom, 1850–1914 (New York: Columbia University Press).

    • Search Google Scholar
    • Export Citation
  • Eichengreen, Barry, Andrew Rose, and Charles Wyplosz, 1995, “Exchange Market Mayhem: The Antecedents and Aftermath of Speculative Attacks” Economic Policy, Vol. 21 (October), pp. 249312.

    • Search Google Scholar
    • Export Citation
  • Eijffinger, Sylvester, C.W. Lemmen, and Jan J.G. Lemmen, 1995, “Money Market Integration in Europe,” Swiss Journal of Economics and Statistics, Vol. 131 (March), pp. 337.

    • Search Google Scholar
    • Export Citation
  • Elstein, Aaron, 1997, “1996 Activity Slowed Down, But Deals Should Heat Up,” American Banker, January 31, pp. 2A9A.

  • Emerging Markets Traders Association, 1997, Debt Trading Volume Survey 1996 (March 17).

  • Emmons, William, 1997, “A Tale of Two Cycles,” Monetar Trends, Federal Reserve Bank of St. Louis (April).

  • ERE (Economic Research Europe), forthcoming, “A Study on the Effectiveness and Impact of Internal Market Integration on the Banking and Credit Sector” (unpublished; Economic Research Europe and Public and Corporate Economic Consultants (PACEC) Ltd., Cambridge, England).

    • Search Google Scholar
    • Export Citation
  • Euromoney, 1997, “Exotics Enter the Mainstream” (March), pp. 12730.

  • European Commission, 1995, Green Paper on the Practical Arrangements for the Introduction of the Single Currency (Luxembourg: Office for Official Publications of the European Community).

    • Search Google Scholar
    • Export Citation
  • European Monetary Institute, 1996, “First Progress Report on the TARGET Project” (Frankfurt, August).

  • European Monetary Institute, 1997, The Single Monetary Policy in Stage Three: Specification of the Operational Framework (Frankfurt, January).

    • Search Google Scholar
    • Export Citation
  • Feldstein, Martin, and Charles Horioka, 1980, “Domestic Saving and International Capital Flows,” Economic Journal, Vol. 90 (June), pp. 31429.

    • Search Google Scholar
    • Export Citation
  • Fernandez-Arias, Eduardo, 1996, “The New Wave of Private Capital Flows: Push or Pull?” Journal of Development Economics, Vol. 48 (March), pp. 38418.

    • Search Google Scholar
    • Export Citation
  • Fishlow, Albert, 1985, “Lessons from the Past: Capital Markets During the Nineteenth Century and the Interwar Period,” International Organization, Vol. 39, pp. 383139.

    • Search Google Scholar
    • Export Citation
  • Flood, Robert P., and Peter M. Garber, 1984a, “Gold Monetization and Gold Discipline,” Journal of Political Economy, Vol. 92 (February), pp. 90107.

    • Search Google Scholar
    • Export Citation
  • Flood, Robert P., and Peter M. Garber, 1984b, “Collapsing Exchange Rate Regimes: Some Linear Examples,” Journal of International Economics, Vol. 17 (August), pp. 113.

    • Search Google Scholar
    • Export Citation
  • Flood, Robert P., and Peter M. Garber, and Charles Kramer, 1996, “Collapsing Exchange Rate Regimes: Another Linear Example,” Journal of International Economics, Vol. 41 (November), pp. 22334.

    • Search Google Scholar
    • Export Citation
  • Flood, Robert P., and Nancy P. Marion, 1996, “Speculative Attacks: Fundamentals and Self-Fulfilling Prophecies,” NBER Working Paper 5789 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Flood, Robert P., and Andrew K. Rose, 1995, “Fixing Exchange Rates: A Virtual Quest for Fundamentals,” Journal of Monetary Economics, Vol. 36 (August), pp. 337.

    • Search Google Scholar
    • Export Citation
  • Folkerts-Landau, David, and Peter Garber, 1992, “The European Central Bank: A Bank or a Monetary Policy Rule,” NBER Working Paper No. 4016 (Cambridge, Massachusetts: National Bureau of Economic Research), pp. 133.

    • Search Google Scholar
    • Export Citation
  • Frankel, Jeffrey A., 1996, “Exchange Rates and the Single Currency,” in The European Equity Markets: The State of the Union and an Agenda for the Millennium, ed. by Benn Steil (Copenhagen: European Capital Markets Institute).

    • Search Google Scholar
    • Export Citation
  • Frankel, Jeffrey A., and Andrew K. Rose, 1996, “Currency Crashes in Emerging Markets: An Empirical Treatment,” Journal of International Economics, Vol. 41 (November), pp. 35168.

    • Search Google Scholar
    • Export Citation
  • Frankel, Jeffrey A., Steven Phillips, and Menzie Chinn, 1993, “Financial and Currency Integration in the European Monetary System: The Statistical Record,” in Adjustment and Growth in the European Monetary Union, ed. by Francisco Torres and Francesco Giavazzi (New York: Cambridge University Press).

    • Search Google Scholar
    • Export Citation
  • Fratianni, Michele, and Juergen von Hagen, 1990, “The European Monetary System Ten Years After,” Carnegie Rochester Conference Series on Public Policy, Vol. 32, pp. 173242.

    • Search Google Scholar
    • Export Citation
  • Garber, Peter M., 1996, “Managing Risks to Financial Markets from Volatile Capital Flows: The Role of Prudential Regulation,” International Journal of Finance and Economics, Vol. 1 (July), pp. 18395.

    • Search Google Scholar
    • Export Citation
  • Garber, Peter M., 1997, “Notes on the Role of TARGET in a Stage III Crisis” (unpublished; Brown University).

  • Giddy, Ian, Anthony Saunders, and Ingo Walter, 1996, “Clearance and Settlement,” in The European Equity Markets: The State of the Union and an Agenda for the Millennium, ed. by Benn Steil (Copenhagen: European Capital Markets Institute), pp. 32154.

    • Search Google Scholar
    • Export Citation
  • Glen, Jack D., and Philippe Jorion, 1993, “Currency Hedging for International Portfolios,” Journal of Finance, Vol. 48 (December), pp. 186586.

    • Search Google Scholar
    • Export Citation
  • Goldberg, Linda S., 1994, “Predicting Exchange Rate Crises: Mexico Revisited,” Journal of International Economics, Vol. 36 (May), pp. 41330.

    • Search Google Scholar
    • Export Citation
  • Goldfajn, Ilan, and Rodrigo O. Valdes, 1997, “Capital Flows and the Twin Crises: The Role of Liquidity,” IMF Working Paper 97/87 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Goldman Sachs International, 1997a, “Are BTPs Too Expensive?” Italian Economics Analyst, Issue No. 97/01 (February).

  • Goldman Sachs International, 1997b, “The Equity Risk Premium and the Brave New Business Cycle,” U.S. Economics Analyst, Issue No. 97/08 (February).

    • Search Google Scholar
    • Export Citation
  • Goldstein, Morris, 1997, “The Case for an International Banking Standard,” Policy Analyses in International Economics No. 47 (Washington: Institute for International Economics).

    • Search Google Scholar
    • Export Citation
  • Goldstein, Morris, and Michael Mussa, 1993, “The Integration of World Capital Markets,” IMF Working Paper 93/95 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Goldstein, Morris, and Philip Turner, 1996, “Banking Crises in Emerging Economies: Origins and Policy Options,” BIS Economic Paper No. 46 (Basle: Bank for International Settlements).

    • Search Google Scholar
    • Export Citation
  • Goodhart, Charles, and Dirk Schoenmaker, 1995, “Monetary Policy and Banking Supervision,” Oxford Economic Papers, Vol. 47 (October), pp. 53960.

    • Search Google Scholar
    • Export Citation
  • Greenspan, Alan, 1997, remarks at the Conference on Bank Structure and Competition at the Federal Reserve Bank of Chicago, January 5, 1997, BIS Review, No. 50 (May 29), pp. 17.

    • Search Google Scholar
    • Export Citation
  • Group of Ten, 1997, Financial Stability in Emerging Market Economies (Basle: Bank for International Settlements, April).

  • Gurley, John G., and Edward S. Shaw, 1960, Money in a Theory of Finance (Washington: Brookings Institution).

  • Haque, Nadeem U., and Peter J. Montiel, 1991, “Capital Mobility in Developing Countries: Some Empirical Tests,” World Development, Vol. 19 (October), pp. 139198.

    • Search Google Scholar
    • Export Citation
  • Honohan, Patrick, 1997, “Banking System Failures in Developing and Transition Countries: Diagnosis and Prediction,” BIS Working Paper No. 39 (Basle: Bank for International Settlements).

    • Search Google Scholar
    • Export Citation
  • Howell, Michael J., 1993, “Institutional Investors and Emerging Stock Markets,” in Portfolio Investment in Developing Countries, ed. by Stijn Claessens and Sudarshan Gooptu, World Bank Discussion Paper No. 228 (Washington: World Bank), pp. 7887.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 1994, 1995, 1996, International Capital Markets: Developments, Prospects, and Policy Issues, World Economic and Financial Surveys (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 1997, World Economic Outlook, May 1997: A Survey by the Staff of the International Monetary Fund, World Economic and Financial Surveys (Washington).

    • Search Google Scholar
    • Export Citation
  • Ireland, National Treasury Management Agency, 1996, Report and Accounts for the Year Ended December 31, 1995.

  • James, Harold, 1996, International Monetary Cooperation Since Bretton Woods (Washington: International Monetary Fund; New York: Oxford University Press).

    • Search Google Scholar
    • Export Citation
  • Jeanneau, S., 1996, “The Market for International Asset-Backed Securities,” International Banking and Financial Market Developments (Basle: Bank for International Settlements, November), pp. 3646.

    • Search Google Scholar
    • Export Citation
  • Jones Lang Wootton, 1997, Quarterly Investment Report: The European Property Market (London).

  • J.P. Morgan, 1996, “The Euro, FX Reserves and Vehicle Currencies: Some Unusual Findings,” Morgan Guaranty Trust Company, Foreign Exchange Research (September 13).

    • Search Google Scholar
    • Export Citation
  • J.P. Morgan,, 1997a, “European Economic Outlook” (January/February).

  • J.P. Morgan, 1997b, “Bearish on the Nikkei” (February 28).

  • J.P. Morgan, 1997c, “What Happens If EMU Is Delayed?” (March 21).

  • Kaminsky, Graciela L., and Carmen M. Reinhart, 1996, “The Twin Crises: The Causes of Banking and Balance-of-Payments Problems,” IMF Seminar Series, No. 1996–12, pp. 126.

    • Search Google Scholar
    • Export Citation
  • Kaminsky, Graciela L., Saul Lizondo, and Carmen M. Reinhart, 1997, “Leading Indicators of Currency Crises,” IMF Working Paper 97/79 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Kenen, Peter B., 1997, “Monetary Policy in Stage Three: A Review of the Framework Proposed by the European Monetary Institute,” paper presented at a conference on the “Monetary, Fiscal, and Financial Implications of European Monetary Union,” European University Institute, Florence, June.

    • Search Google Scholar
    • Export Citation
  • Kindleberger, Charles P., 1965, Balance of Payments Deficits and the International Market for Liquidity, Princeton Essays in International Finance No. 46 (Princeton, New Jersey).

    • Search Google Scholar
    • Export Citation
  • Kindleberger, Charles P., 1982, “The Cyclical Pattern of Long-Term Lending,” in The Theory and Experience of Economic Development: Essays in Honour of Sir W. Arthur Lewis, ed. by Mark Gersovitz and others (London: Allen & Unwin).

    • Search Google Scholar
    • Export Citation
  • Kneeshaw, J.T., 1995, “A Survey of Non-financial Sector Balance Sheets in Industrialized Countries: Implications for the Monetary Policy Transmission Mechanism,” BIS Working Paper No. 25 (Basle: Bank for International Settlements).

    • Search Google Scholar
    • Export Citation
  • Kritzman, Mark, 1993, “Optimal Currency Hedging Policy with Biased Forward Rates,” Journal of Portfolio Management, Vol. 19, No. 4, pp. 94100.

    • Search Google Scholar
    • Export Citation
  • Krugman, Paul, 1979, “A Model of Balance-of-Payments Crises,” Journal of Money, Credit, and Banking, Vol. 11 (August), pp. 31125.

    • Search Google Scholar
    • Export Citation
  • Lall, Subir, 1997, “Speculative Attacks, Forward Market Intervention, and the Classic Bear Squeeze” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Lauterbach, Beni, and Uri Ben-Tsiyon, 1993, “Stock Market Crashes and the Performance of Circuit Breakers: Empirical Evidence,” Journal of Finance, Vol. 48 (December), pp. 190925.

    • Search Google Scholar
    • Export Citation
  • Lee, Charles, Mark Ready, and Paul Seguin, 1994, “Volume, Volatility, and the New York Stock Exchange Trading Halts,” Journal of Finance, Vol. 49 (March), pp. 183214.

    • Search Google Scholar
    • Export Citation
  • Lindgren, Carl-Johan, Gillian Garcia, and Matthew I. Saal, 1996, Bank Soundness and Macroeconomic Policy (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Masson, Paul R., and Bart G. Turtelboom, 1997, “Characteristics of the Euro, the Demand for Reserves, and Policy Coordination Under EMU,” in EMU and the International Monetary System, ed. by Paul R. Masson, Thomas H. Krueger, and Bart G. Turtelboom (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Masson, Paul R., Thomas H. Krueger, and Bart G. Turtelboom, eds., 1997, EMU and the International Monetary System (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Mathieson, Donald J., and Liliana Rojas-Suarez, 1993, Liberalization of the Capital Account: Experiences and Issues, IMF Occasional Paper No. 103 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Melick, William R., and Charles P. Thomas, 1997, “Recovering an Asset’s Implied PDF from Option Prices: An Application to Crude Oil During the Gulf Crisis,” Journal of Financial and Quantitative Analysis, Vol. 32, No. 1, pp. 91115.

    • Search Google Scholar
    • Export Citation
  • Miller, Victoria, 1996, “Speculative Currency Attacks with Endogenously Induced Commercial Bank Crises,” Journal of International Money and Finance, Vol. 15 (June), pp. 383403.

    • Search Google Scholar
    • Export Citation
  • Mishkin, Frederic S., 1996, “Asymmetric Information and Financial Crises: A Developing Country Perspective,” IMF Seminar Series, No. 1996–11.

    • Search Google Scholar
    • Export Citation
  • “Mixed Reactions to US Regulatory Changes,” 1997, International Financing Review, Issue No. 1169, February 8, p. 99.

  • Mussa, Michael, 1988, Commentary on Charles Goodhart, “The International Transmission of Asset Price Volatility,” in Financial Market Volatility, Federal Reserve Bank of Kansas City Symposium Series, pp. 12732.

    • Search Google Scholar
    • Export Citation
  • Obstfeld, Maurice, 1994, “The Logic of Currency Crises,” NBER Working Paper No. 4640 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Obstfeld, Maurice, 1997, “Destabilizing Effects of Exchange-Rate Escape Clauses,” Journal of International Economics, Vol. 43 (August), pp. 6178.

    • Search Google Scholar
    • Export Citation
  • Obstfeld, Maurice, and Alan M. Taylor, 1997, “The Great Depression as a Watershed: International Capital Mobility over the Long Run,” NBER Working Paper No. 5960 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • O’Keefe, John P., 1996, “Banking Industry Consolidation: Financial Attributes of Merging Banks,” FDIC Banking Review, Vol. 9 (December).

    • Search Google Scholar
    • Export Citation
  • Organization for Economic Cooperation and Development, OECD Financial Statistics, Part III, Non-financial Enterprises Financial Statements, various issues (Paris: OECD).

    • Search Google Scholar
    • Export Citation
  • Organization for Economic Cooperation and Development, 1996, Bank Profitability: Financial Statements of Banks, 1985–1995 (Paris).

  • Pagano, Marco, 1996, “The Cost of Trading in European Equity Markets,” London School of Economics Financial Markets Group Special Paper Series No. 83, pp. 122.

    • Search Google Scholar
    • Export Citation
  • Paribas Capital Markets, 1996, “EMU Countdown,” International Research (London: Banque Paribas), September 9.

  • Paribas Capital Markets, 1997, “EMU Countdown,” International Research (London), various issues.

  • Perold, Andre F., and Evan C. Schulman, 1988, “The Free Lunch in Currency Hedging: Implications for Investment Policy and Performance Standards,” Financial Analysts Journal, Vol. 44 (May-June), pp. 4550.

    • Search Google Scholar
    • Export Citation
  • Prati, Alessandro, and Garry Schinasi, 1997, “European Monetary Union and International Capital Markets: Structural Implications and Risks,” IMF Working Paper 97/62 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Reisen, Helmut, and Helene Yeches, 1993, “Time-Varying Estimates on the Openness of the Capital Account in Korea and Taiwan,” Journal of Development Economics, Vol. 41 (August), pp. 285305.

    • Search Google Scholar
    • Export Citation
  • Rich, Georg, 1989, “Canadian Banks, Gold, and the Crisis of 1907,” Explorations in Economic History, Vol. 26 (April), pp. 13560.

  • Rojas-Suarez, Liliana, 1991, “Risk and Capital Flight in Developing Countries,” in Determinants and Systemic Consequences of International Capital Flows, by Morris Goldstein and others, Occasional Paper No. 77 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Sachs, Jeffrey D., Aaron Tornell, and Andres Velasco, 1996, “Financial Crises in Emerging Markets: The Lessons from 1995,” Brookings Papers on Economic Activity: 1, Brookings Institution, pp. 147215.

    • Search Google Scholar
    • Export Citation
  • Salant, Stephen W., and Dale W. Henderson, 1978, “Market Anticipations of Government Policies and the Price of Gold,” Journal of Political Economy, Vol. 86 (August), pp. 62748.

    • Search Google Scholar
    • Export Citation
  • Salomon Brothers, 1996, “Managing Convergence,” Prospects for Financial Markets (December).

  • Salomon Brothers, 1997a, Chilean Bank Reference Guide: December 1996 (New York, March).

  • Salomon Brothers, 1997b, Argentine Bank Reference Guide: December 1996 (New York, April).

  • SBC Warburg, 1996, EMU: Opportunity or Threat? (December).

  • Smith, R. Todd, 1995, “Markets for Corporate Debt Securities,” IMF Working Paper 95/67 (Washington: International Monetary Fund).

  • Söderlind, Paul, and Lars E.O. Svensson, 1997, “New Techniques to Extract Market Expectations from Financial Instruments,” NBER Working Paper No. 5877 (Cambridge, Massachusetts: National Bureauu of Economic Research) (forthcoming in Journal of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Standard & Poor’s, 1996, “Brady Bonds Still Top Asset Class in Emerging Markets,” Credit Week (May 9).

  • Steinherr, Alfred, 1996, “Universal vs. Specialized Banks,” Economic Studies Working Paper No. 20 (Washington: American Institute for Contemporary German Studies, The Johns Hopkins University, December).

    • Search Google Scholar
    • Export Citation
  • Sundararajan, Vasudevan, and Tomas J.T. Balino, eds., 1991, Banking Crises: Cases and Issues (Washington: International Monetary Fund).

  • Sweden, National Debt Office, 1996, Annual Report for Fiscal Year 1994/95.

  • Taylor, Alan M., 1996, “International Capital Mobility in History: The Saving-Investment Relationship,” NBER Working Paper No. 5943 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Thomas, Brinley, 1967, “The Historical Record of International Capital Movements to 1913,” in Capital Movements and Economic Development, ed. by John A. Adler (New York: St. Martin’s Press).

    • Search Google Scholar
    • Export Citation
  • Triffin, Robert, 1966, The Balance of Payments and the Foreign Investment Position of the United States, Princeton Essays in International Finance No. 55 (Princeton, New Jersey).

    • Search Google Scholar
    • Export Citation
  • United Nations, 1949, International Capital Movements During the Interwar Period (New York: United Nations).

  • United States, Department of Commerce, Survey of Current Business, various issues.

  • United States, Department of the Treasury, Treasury Bulletin, various issues.

  • United States, Office of the Comptroller of the Currency, 1996, Quarterly Derivatives Fact Sheet, 4th quarter.

  • United States, Senate, 1990, “Implementation of the Brady Plan,” Hearing Before the Subcommittee on International Debt of the Committee on Finance (March 2).

    • Search Google Scholar
    • Export Citation
  • Velasco, Andres, 1987, “Financial Crises and Balance of Payment Crises: A Simple Model of the Southern Cone Experience,” Journal of Development Economics, Vol. 27 (October), pp. 26383.

    • Search Google Scholar
    • Export Citation
  • Vos, Rob, 1994, Debt and Adjustment in the World Economy: Structural Asymmetries in North-South Interactions (New York: St. Martin’s Press).

    • Search Google Scholar
    • Export Citation
  • Wheeler, Graeme, forthcoming, “New Zealand Experience with Autonomous Sovereign Debt Management,” in Risk Management for Sovereign Countries (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • World Bank, 1996a, “Offer of Currency Choice for Existing Currency Pool Loans,” IBRD Financial Products.

  • World Bank, 1996b, World Debt Tables 1994–95 (Washington).

  • World Bank, 1997, Private Capital Flows to Developing Countries: The Road to Financial Integration (New York: Oxford University Press).

  • Wymeersch, Eddy, 1996, “The Implementation of the ISD and CAD in the National Legal System,” paper presented at a conference of the University of Genoa, “European Investment Markets: Implementation of the ISD and National Law Reforms,” Genoa,