doi:http://dx.doi.org/10.1596/40567

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Melecky, Martin

Finance, Competitiveness & Innovation Global Practice (FCI), World Bank

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Finance, Competitiveness & Innovation Global Practice (FCI), World Bank

Last updated: October 16, 2024

Biography

Martin Melecky is Lead Economist at the Finance, Competitiveness and Innovation Global Practice, World Bank. He has led financial sector assessment programs, development policy operations, and investment and technical assistance projects in South Asia, Emerging Europe, and Central Asia. Martin has coauthored regional reports on hidden debt in South Asia, economic corridors in South Asia, and finance for shared prosperity in Europe and Central Asia. He is also the lead author of the chapter in the 2014 World Development Report on the role of the financial system in risk management. Martin has published ina range of journals (Journal of Development Economics; World Bank Economic Review; World Bank Research Observer; Cambridge Journal of Regions, Economy and Society; Journal of Regional Science; Journal of Banking and Finance; Journal of Financial Stability; Journal of International Money and Finance; and Climate Change Economics). A Czech national, he received a PhD in economics from the University of New South Wales, Australia.

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Publication Search Results

Now showing 1 - 10 of 39

Financial Deepening and Carbon Emissions Intensity: Evidence from a Global Sample of Countries
(Washington, DC: World Bank, 2024-10-16) Fisera, Boris; Melecky, Martin; Singer, Dorothe
Financial deepening contributes to economic development, but its effect on the carbon intensity of production is an open empirical question. If banks finance investments in new, greener technologies, they can contribute to lowering carbon dioxide emissions per unit of output. But if they finance investments in more traditional, carbon-intensive technologies, they can contribute to increasing carbon dioxide emissions per unit of output. This paper studies the impact of financial deepening—an increased provision of bank credit as a share of gross domestic product—on carbon dioxide emissions per dollar of gross domestic product in a global sample of 125 economies from 1990 to 2019. Using a local projections approach, the paper finds that, on average, financial deepening leads to a relative increase in carbon dioxide emissions per dollar of gross domestic product, indicating that financial institutions finance relatively more carbon-intensive investments and consumption. However, a better institutional environment mitigates this adverse effect of financial deepening: conditional local projections reveal that in countries with more environmental regulations, a stronger rule of law, and a financial system that is relatively more market- than bank-based, financial deepening does not lead to higher carbon dioxide emissions per dollar of gross domestic product. Specifically, the results show that countries with an initially lower carbon intensity of production can mitigate the average adverse effect of financial deepening on carbon dioxide emissions per dollar of gross domestic product by improving their general institutional environment proxied by adherence to the rule of law, and, to some extent, by developing their financial markets. By contrast, countries with an initially higher carbon intensity of production are better off focusing on environmental regulations to mitigate the unconditional adverse effect of financial deepening on carbon dioxide emissions per dollar of gross domestic product.
Braced for Impact: Reforming Kazakhstan’s National Financial Holding for Development Effectiveness and Market Creation
(Washington, DC: World Bank, 2023-11-05) Melecky, Martin; Di Benedetta, Pasquale; Ahmad Fontan, Ismael; Jambal, Ganbaatar; Noel, Michel
Braced for Impact: Reforming Kazakhstan’s National Financial Holding for Development Effectiveness and Market Creation offers a framework for assessing the readiness of development finance institutions (DFIs) and their conglomerates to deliver credible development impact and create financial markets. The framework focuses on accountability for impact, responsible leveraging of entrusted capital, holistic risk management, and proper governance. It is used to assess Baiterek, Kazakhstan’s national financial holding—a conglomerate of DFIs—and to derive policy options and practical recommendations for the given country context. If the recommended reforms are implemented, Baiterek will be braced for positive impact on Kazakhstani firms, households, and the environment while also helping create deeper financial markets through robust mobilization of private capital. A reformed Baiterek could become a leading global DFI conglomerate and a role model for similar institutions in other countries. However, if too few or none of the recommended reforms are undertaken, Baiterek will need to brace for further criticism from unhappy stakeholders.
Russia’s Invasion of Ukraine and Firm Performance in Central Asia: The Role of Export Links and Digital Gains
(World Bank, Washington, DC, 2023-08-30) Dalvit, Nicolo; Iootty, Mariana; Melecky, Martin; Srinivasan, Nithya; Melecky, Martin
This paper studies the effect of Russia’s invasion of Ukraine on the performance of firms in Central Asia. It uses unique data from the Business Pulse Survey run by the World Bank in the Kyrgyz Republic, Tajikistan, and Uzbekistan, which tracks the sales and employment—along with other main characteristics—of about 1,200 to 1,800 firms in a panel structure. The survey contains two waves before and one wave after Russia’s invasion of Ukraine. Using the difference-in-differences methodology in a regression setup, the analysis finds that Central Asian firms with pre-invasion trade links to Russia suffered greater drops in sales and employment after the invasion—even though exporters to Russia may have experienced, on average, higher sales during the studied period. Considering the pre-invasion digitization of firms, the findings show that digitization helped firms increase their average employment during the studied period. However, the analysis does not find any significant mitigating effect of digitalization associated with the impact of the invasion.
Bank Ownership and Firm Innovation
(World Bank, Washington, DC, 2023-06-20) De Nicola, Francesca; Melecky, Martin; Iootty, Mariana; Melecky, Martin
This paper studies the effect of bank ownership on product innovation by borrowing firms, highlighting the role of the state, foreign, and combined foreign-state bank ownership. It uses Enterprise Survey data for more than 22,000 firms in 49 countries from 2016 to 2020, linked to Fitchconnect data on banks: their ownership, soundness indicators, and legal origins. The paper confirms that a firm's access to bank credit is associated with a greater probability of product innovation, even when adjusting for possible reverse causality. If the credit is provided by a state-owned bank, the probability that the borrowing firm will innovate increases. The analysis does not find a similarly positive effect for foreign bank ownership. But when considering the combined effect of foreign state ownership, the results are most statistically and economically significant. Although the results may not be extendable to research and development spending (a key input to innovation), the findings show that foreign state banks can serve as an additional financing vehicle to stimulate radical innovation alongside equity financiers.
Financial Inclusion and Stability: Review of Theoretical and Empirical Links
(Published by Oxford University Press on behalf of the World Bank, 2020-12-02) Čihák, Martin; Mare, Davide Salvatore; Melecky, Martin; Melecky, Martin; Mare, Davide S.
This paper reviews the literature on financial stability and financial inclusion—two broad objectives of financial policy that may be mutually dependent. The review suggests the possible co-dependence of stability and inclusion. We build on this theoretical motivation by exploring stylized facts (correlations) obtained from data sets that have been widely used in the literature on financial inclusion and stability. The empirical correlations suggest that, on average, financial inclusion and stability correlate negatively, but the correlations vary systematically across individuals, firms, and country contexts. Depending on the financial instrument and stability measure, positive correlations are also likely. These associations reflect some findings in the existing literature, but also point to knowledge gaps that can be addressed by future research.
Fiscal Risks from Early Termination of Public-Private Partnerships in Infrastructure
(Washington, DC: World Bank, 2022-03-15) Herrera Dappe, Matias; Turkgulu, Burak; Melecky, Martin
Public-private partnerships (PPPs) in infrastructure provision have expanded around the world since the early 1990s. Well-structured PPPs can unleash efficiency gains, but PPPs create liabilities for governments, including contingent ones. This paper assesses the fiscal risks from contingent liabilities from early termination of PPPs in a sample of developing countries. It analyzes the drivers of early termination and identifies systematic contractual, institutional, and macroeconomic factors that can help predict the probability that a PPP project will be terminated early, using a flexible parametric hazard regression. Using the probability distributions from the regression analysis, it simulates scenarios of fiscal risks for governments from early termination of PPPs in the electricity and transport sectors, adopting a value-at-risk approach. The findings indicate that the rate of early terminations decreases with direct government support, greater constraints on executive power, and the award of the PPP by subnational governments; it increases with project size and macro-financial shocks. The simulations show that fiscal risks from infrastructure PPP portfolios are not negligible in some countries, reaching as high as 2.8 percent of GDP. A severe macro-financial shock substantially increases the estimates, with the value at risk the year after the shock 11–20 times larger.
Bank Bailouts and Fiscal Contingent Liabilities
(World Bank, Washington, DC, 2023-01) Mare, Davide S.; Melecky, Martin; Murina, Hanna; Melecky, Martin; Mare, Davide S.
Government intervention to bail out troubled banks can produce a sizable fiscal contingent liability. Drawing on a rich history of various forms of staggered bailouts, this paper studies the link between bank bailouts and fiscal contingent liabilities using bank-level data for Kazakhstan—an upper-middle-income country in Central Asia. The paper first estimates the probability that a bank in distress is bailed out, conditioning on bank characteristics and financial soundness. Second, it estimates the magnitude of bailout costs depending on the size of banks, their ownership type, financial soundness, and the type of bailout instrument used by the government. The latter aims to contrast the fiscal costs when the government uses bailout instruments without recourse on bank future profits—such as government purchases of bad loans above market value—versus instruments that require repayment of the public support with adequate compensation for the government’s alternative costs—such as properly governed equity injections. Third, the paper illustrates how the estimations could be used for projecting the expected contingent liabilities from bank bailouts.
PPP Distress and Fiscal Contingent Liabilities in South Asia
(World Bank, Washington, DC, 2022-08) Herrera Dappe, Matias; Turkgulu, Burak; Melecky, Martin
Since the early 1990s, public-private partnerships (PPPs) in infrastructure provision have been expanding around the world and in South Asia. Well-structured PPPs can unleash efficiency gains in the provision of infrastructure. But PPPs create liabilities for governments, including contingent liabilities. Providing infrastructure through PPPs is preferred to public provision if the efficiency gains offset the higher cost of private financing and the unexpected public liabilities that PPPs may create. This paper attempts to assess the fiscal risks from contingent liabilities assumed by South Asian governments owing to their current stock of PPPs in infrastructure. First, it analyzes the drivers of PPP distress. Second, it simulates scenarios of fiscal risks for South Asian governments from risky PPPs. Third, it studies specific PPP contract designs and their relationship with early termination in South Asia to draw lessons for future PPP contract structuring.
Assessing Uzbekistan’s Transition: Country Economic Memorandum
(World Bank, Washington, DC, 2021-11-08) Izvorski, Ivailo; Vatyan, Arman; Trushin, Eskender; Abdul-Hamid, Husein; Dalvit, Nicolo; Safarov, Maksudjon; Iootty, Mariana; Novikova, Marina; Melecky, Martin; Ahmedov, Mohirjon; Manuilova, Natalia; Zorya, Sergiy; Nagaraj, Vinayak; Izvorski, Ivailo; Melecky, Martin
Uzbekistan’s transition from planning to market started almost thirty years ago following its independence from the Soviet Union. For most of this period, economic modernization and transformation were stalled, with little change in institutions and policies from those prevailing at the time of the planned economy. In late 2016, Uzbekistan surprised by launching reforms with a breadth and speed that at times exceeded the pace of those observed in some of the earlier reformers at a similar stage of the process. In November 2018, building on the results from more than a year of economic reforms, the government announced the agenda for the next phase of its bold and ambitious economic transformation. In terms of the pace of transition, Uzbekistan’s record has been mixed but appropriate, given that reforms are dependent on experience with markets and prices, initial conditions, and institutional strength. Before the Coronavirus (COVID-19) pandemic started, the reform momentum was supported by comfortable external and fiscal buffers and a robust global economy. The buffers are still sizable, even with doubling of public debt since 2017, and a sign of strength but the pull from the global economy has been substantially diminished. The rest of the introduction reviews progress in the key areas of economic transformation.
Late Banking Transitions: Comparing Uzbekistan to Earlier Reformers
(World Bank, Washington, DC, 2022-03) Babasyan, Davit; Gu, Yunfan; Melecky, Martin
Uzbekistan is one of the late transition economies. This paper compares the early experience and challenges that Uzbekistan confronts in transitioning its banking system to market principles against the earlier experience with banking transitions from Poland, Russia, and Vietnam, and other relevant evidence from the literature. To that effect, the paper uses new data on Uzbekistan’s banking sector, the data on past transition economies, and qualitative and quantitative evidence from the literature. Uzbekistan’s latest experience with banking transition generates important lessons for countries that have yet to transition. Namely, how much can a new transitioning country reasonably expect to accomplish within the medium term Which banking reforms are the most essential and how should they best be sequenced How can expectations about efficient capital reallocation be managed, access to finance made more equitable, and transition risks of financial instability be mitigated What are the complementary reforms in the real sector, especially of state-owned enterprises and the competition framework, that need to happen in tandem for the new banking market to function properly