This paper builds a multiperiod, general equilibrium framework for analyzing the macroeconomic effects of financial reforms in developing countries and the costs of maintaining official safety nets under the financial system during such reforms.While a financial liberalization yields efficiency...

This paper reviews the experience with capital controls in industrial and developing countries, considers the policy issues raised when the effectiveness of capital controls diminishes, examines the medium-term benefits and costs of an open capital account, and analyzes the policy measures that...

This paper examines how a country`s exchange rate policy should be adjusted when the degree of integration between domestic and external financial markets increases as a result of both domestic financial liberalization and the relaxation of capital controls. As the financial structure is opened...

Official controls on interest rates and capital flows rule out the use of traditional interest rate parity conditions to measure changes in the degree of capital mobility confronting developing countries. This paper develops an alternative technique for measuring the cost of undertaking...

The rating agencies' and bank supervisors' records of prompt identification of banking problems in emerging markets has not been satisfactory. This paper suggests that such deficiencies could be explained by the use of financial indicators that, while appropriate for industrial countries, do not...

The depth of and access to financial services provided by banks throughout Latin America are extremely low in spite of its recognized importance for economic activity, employment and poverty alleviation. Low financial depth and access hurts the poor the most and is due to a variety of obstacles...

This paper focuses on the design of successful bank restructuring programs in Latin America-a region where banking crises have been frequent in the past two decades. In each episode, Latin American policymakers have had to act under the severe constraints imposed on developing countries, which...

In this paper, we raise fundamental questions about how banks in Latin America ought to be supervised. We argue that the concentration of wealtholders in Latin America and the resultant iliquidity of equity markets permit investors who control banks to subvert the intent of capital requirements,...

This paper argues that the experiences with banking crises in Latin America have been different from those in the industrial world because of the peculiarities of Latin American financial systems. Hence, applying the lessons derived from crisis resolution in the industrial world is not...

The risks of large capital losses on the domestic assets of developing countries resulting from expropriation, inflation, or devaluations are identified as the major causes of capital flight. The combination of large foreign loans and capital flight from developing countries during the 1970s and...