Beck, Thorsten

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Financial Economics
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Last updated February 1, 2023
Thorsten Beck is Professor of Economics and Chairman of the European Banking Center. Before joining Tilburg University and the Center, he worked at the Development Research Group of the World Bank. His research and policy work has focused on two main questions: What is the effect of financial sector development on economic growth and poverty alleviation? What are the determinants of a sound and effective financial sector? Recently, his research has focused on access to financial services by small and medium-sized enterprises and households, as well as bank resolution, especially for cross-border banks. He is co-author of several policy reports, including "Making Finance Work for Africa" and "Finance for All? Policies and Pitfalls in Expanding Access." His country experience in both research and policy work includes Bangladesh, Bolivia, Brazil, China, Colombia, Mexico, Peru, Russia and several sub-Saharan African countries.   
Citations 27 Scopus

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Now showing 1 - 10 of 78
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    What Explains the Price of Remittances? An Examination Across 119 Country Corridors
    (World Bank, 2011-01-30) Beck, Thorsten ; Martínez Pería, María Soledad
    Remittances are a substantial source of external financing for developing countries that influence many aspects of their development. Though research has shown that remittances are both expensive and price sensitive, little is known about what explains their price. Newly gathered data across 119 country pairs or corridors are used to explore the factors associated with the price of remittances. Corridors with larger numbers of migrants and more competition among providers are found to exhibit lower prices for remittances, when average prices across all types of remittance service providers are considered. Corridors with lower barriers to access banking services and broader regulation of remittance service providers also have lower prices. Remittance prices are higher in richer corridors and in corridors with greater bank participation in the remittance market. Few significant differences emerge when results are compared across banks and, separately, across money transfer operators. However, estimations for Western Union, a leading player in the remittances business, suggest that its prices are less sensitive to competition.
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    Finance, Inequality, and Poverty: Cross-Country Evidence
    (World Bank, Washington, DC, 2004-06) Beck, Thorsten ; Demirguc-Kunt, Asli ; Levine, Ross
    While substantial research finds that financial development boosts overall economic growth, the authors study whether financial development is pro-poor: Does financial development disproportionately raise the income of the poor? Using a broad cross-country sample, the authors find that the answer is yes: Financial intermediary development reduces income inequality by disproportionately boosting the income of the poor and therefore reduces poverty. This result is robust to controlling for simultaneity bias and reverse causation.
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    The Determinants of Financing Obstacles
    (World Bank, Washington, DC, 2004-02) Beck, Thorsten ; Demirgüç-Kunt, Asli ; Laeven, Luc ; Maksimovic, Vojislav
    The authors use survey data on a sample of over 10,000 firms from 80 countries to assess (1) how successful a priori classifications are in distinguishing between financially constrained and unconstrained firms, and (2) more generally, the determinants of financing obstacles of firms. They find that older, larger, and foreign-owned firms report less financing obstacles. Their findings thus confirm the usefulness of size, age, and ownership as a priori classifications of financing constraints, while they shed doubts on other classifications used in the literature. Their results also suggest that institutional development is the most important country characteristic explaining cross-country variation in firms' financing obstacles.
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    Law and Firms' Access to Finance
    (World Bank, Washington, DC, 2004-01) Beck, Thorsten ; Demirgüç-Kunt, Asli ; Levine, Ross
    Why does a country's legal origin influence its firms' access to finance? Using data from over 4,000 firms in 38 countries, the authors show that firms in countries with French legal origin face significantly higher obstacles in accessing external finance than firms in common law countries. Next, their results indicate that French legal origin countries tend to have (1) less adaptable legal systems, as defined by the degree to which case law and principles of equity rather than simply statutory law are accepted foundations of legal decisions, and (2) less politically independent judiciaries, as defined by the degree of tenure of supreme court judges and their jurisdiction over cases involving the government. Finally, the authors find that the adaptability of a country's legal system is more important for explaining the obstacles that firms face in contracting for external finance than the political independence of the judiciary. So, they distinguish among competing explanations of why law matters for financial development by empirically documenting the links running from international differences in legal origin to the operation of the financial system at the firm level.
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    Determinants of Life Insurance Consumption across Countries
    (World Bank, Washington, DC, 2002-02) Beck, Thorsten ; Webb, Ian
    The importance of life insurance companies as part of the financial sector has significantly increased over the past decades, both as provider of important financial services to consumers and as a major investor in the capital market. However, the authors still observe a large variance in life insurance consumption across countries, which raises the question of its determinants. The authors use a greatly expanded data set on life insurance consumption to examine the determinants of the demand and supply of life insurance products across countries and over time. Using a cross-sectional sample of 63 countries averaged over 1980-96, the authors find that educational attainment, banking sector development, and inflation are the most robust predictors of life insurance consumption, while income is only a weak predictor. The results on educational attainment and inflation are confirmed in a panel of 23 countries over the period 1960-96. The results strengthen the case for promoting price stability, financial sector reform, and an efficient education system if life insurance and its many benefits are to be fully realized in an economy.
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    Financial and Legal Constraints to Firm Growth : Does Size Matter?
    (World Bank, Washington, DC, 2002-02) Beck, Thorsten ; Demirguc-Kunt, Asli ; Maksimovic, Vojislav
    Using a unique firm-level survey data base, covering fifty four countries, the authors investigate whether different financial, legal, and corruption issues that firms report as constraints, actually affect their growth rates. The results show that the extent to which these factors constrain a firm's growth depends very much on its size, and that it is consistently the smallest firms that are most adversely affected by all these constraints. Firm growth is more affected by reported constraints in countries with underdeveloped financial, and legal systems, and higher corruption. So, policy measures to improve financial, and legal development, and reduce corruption are well justified in promoting firm growth, particularly the development of the small, and medium enterprise sector. But the evidence also shows that the intuitive descriptors of an "efficient" legal system, are not correlated with the components of the general legal constraints that predict firm growth. This finding suggests that the mechanism by which the legal system affects firm performance, is not well understood. The authors' findings also provide evidence that the corruption of bank officials, constraints firm growth. This "institutional failure" should be taken into account, when modeling the monitoring role of financial institutions in overcoming market failures due to informational asymmetries.
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    Structural Issues in the Kenyan Financial System: Improving Competition and Access
    (World Bank, Washington, D.C., 2004-07) Beck, Thorsten ; Fuchs, Michael
    Although by regional standards, Kenya's financial system is relatively well developed and diversified, major structural impediments prevent it from reaching its full potential. Crosscountry comparisons, however, show the importance of a well-developed financial sector for long-term economic growth and poverty alleviation. Experience from other developing economies has shown the detrimental effect of government ownership and the positive impact that foreign bank ownership can have on the development of a market-based financial system. Analyzing and decomposing the high interest rate spreads and margins in Kenya helps identify structural impediments that drive the high cost of and low access to financial services. The limited information sharing on debtors, deficiencies in the legal and judicial system, the limited number of strong and reputable banks and non-transparency and uncertainty in the banking market are major impediments to the development of Kenya's financial system, to reducing spreads and to widening access.
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    Benchmarking Financial Systems : Introducing the Financial Possibility Frontier
    (World Bank, Washington, D.C., 2013-09) Beck, Thorsten ; Feyen, Erik
    Across the world, supply for financial services rarely matches the demand, given multiple market frictions. This paper discusses the concept of the financial possibilities frontier as a constrained optimum to categorize different problems of shallow financial markets or unsustainable expansion. The paper offers three examples of how to use different data sources to apply the frontier concept to assess the state of financial systems.
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    Lending Concentration, Bank Performance and Systemic Risk : Exploring Cross-Country Variation
    (World Bank, Washington, DC, 2013-09) Beck, Thorsten ; De Jonghe, Olivier
    Using both market-based and annual report-based approaches to measure lending specialization for a broad cross-section of banks and countries over the period 2002 to 2011, this paper is the first to empirically gauge the relationship between bank lending specialization and bank performance and stability in an international sample. Theory suggests that banks might benefit from specialization in the form of higher screening and monitoring efficiency, while a diversified loan portfolio might also enhance stability. This paper finds that sectoral specialization increases volatility and systemic risk exposures, while not leading to higher returns. The paper also documents important time, cross-bank, and cross-county variation in this relationship, which is stronger post 2007, for richer countries, countries without regulatory requirements on diversification, banks with lower market power, and banks with more traditional intermediation models.
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    New Tools in Comparative Political Economy : The Database of Political Institutions
    (Washington, DC: World Bank, 2001-01) Beck, Thorsten ; Clarke, George ; Groff, Alberto ; Keefer, Philip ; Walsh, Patrick
    This article introduces a large new cross-country database, the database of political institutions. It covers 177 countries over 21 years, 1975-95. The article presents the intuition, construction, and definitions of the different variables. Among the novel variables introduced are several measures of checks and balances, tenure and stability, identification of party affiliation with government or opposition, and fragmentation of opposition and government parties in the legislature.