Issues in Financial Institution Capital in Emerging Market Economies

For the past twenty years, Asia has been regarded as aneconomic success story. The recent economic turmoil in theregion, however, has prompted a reevaluation of the longtermsustainability of the dynamic economic performance.Undoubtedly, lessons will be drawn from the Asian experience—lessons that will inform future decisions at variouslevels to move financial liberalization forward whileproviding for prudential concerns.Many thoughtful analysts surveying the Asianexperience have focused on the inadequacies and inefficienciesin the banking systems of Asian nations as particularly significantelements in precipitating the current crisis. The bankingproblems of these nations, however, only bring into specificrelief deep, complex, and more pervasive problems in theinstitutional arrangements of the affected nations—problemsthat are, in fact, common to many emerging market countriesthroughout the world. These issues have particular relevanceto the consideration of future financial liberalization and thebroadening of the international financial community viamultilateral trade negotiations and international understandingsamong national financial supervisors.[...]