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Appendix I. Coding Rules
Appendix II. Information Sources
We are grateful to Aart Kraay, Ashoka Mody, Antonio Spilimbergo and Barbara Stallings for helpful comments and suggestions. The latest version of this database could not have been completed without the expert contributions of Sawa Omori, Kruti Bharucha and Adil Mohommad. We also wish to thank Radu Paun and Eun-Jue Chung for excellent research assistance.
An earlier version of the database, covering 36 countries over the period 1973–96 and slightly different categories of reform was used by Abiad and Mody (2005) to investigate how political and economic factors shaped the financial liberalization process.
On the latter, judgment needs to be exercised as some prudence is necessarily required in the granting of licenses, so whenever possible we relied on other scholars’ assessments as to whether a country’s licensing regime was excessively strict or not.
A raw score was first assigned to each dimension, on different scale. Next, each raw score was normalized between 0 and 3 according to a rule.
A recent work by Schindler (2008) codes capital account restrictions using the new IMF Annual Report on Exchange Rate Restrictions for a sample of 91 countries over the period 1995–2005. Other existing indices of capital account restrictions are reviewed in Schindler (2008).
“Joint-stock commercial banks (JSCB) are partially owned by local governments and state owned enterprises, and sometimes by the private sector. They are generally allowed to operate at the national level. City commercial banks are not allowed to operate at the national or regional scale unlike the JSCBs, which is their major competitive disadvantage.” (Garcia-Herrero and others, 2005)
Similar conclusions emerge if one uses changes over three-year periods.
Specifically, the credit control component was normalized to take values between 0 and 3.
Two OECD members—Korea and Mexico—are included in their regional grouping rather than in the OECD group. The income categories are based on the grouping in the World Bank’s 2002 World Development Indicators.
Prepared by Kruti Barucha. The coding rules used in the index follow closely those of Omori (2004), which extend the approach developed by Abiad and Mody (2005). The main departure from Omori’s coding is the introduction of a new category covering for restrictions on the quantity of credit.
According to Omori (2004): “Quintyn and Taylor (2002) categorize the independence of banking supervisory agencies into four: regulatory independence, supervisory independence, institutional independence, and budgetary independence. In this dataset, independence is measured by combining institutional independence and supervisory independence. In the case of central bank independence, a legal framework of a central bank for developed countries and/or the frequency of turnover of governor of the central bank for developing countries are often used indicators. However, as discussed above, since the banking supervisory agency is not necessarily vested in the central bank, legal documents for banking supervision are less available and obtaining the information for counting the frequency of the turnover of the head of the banking supervisory agency is much more difficult. In this vein, we basically relied on experts or researchers’ evaluation in coding the independence of the banking supervisory agency. Lora (1997) also created the indicator based on subjective judgment of the quality of banking supervision.”