doi:http://dx.doi.org/10.1596/41080

Person:
Mare, Davide S.

DEC Development Economics

Last updated: June 20, 2024

Biography

Davide Mare joined the Enterprise Analysis Unit as an Economist in September 2022. Previously, he worked in different units with the World Bank carrying out different roles, including data manager for the World Development Report 2022 and co-author of the report The Innovation Imperative for Developing East Asia. He also holds an Honorary Lecturer position with the University of Edinburgh Business School. His most recent research focuses broadly on the role of the financial sector for firm performance, covering topics such as the design of prudential regulation for the stability of the banking sector, financing the recovery after natural disasters, and the role of a firm financial structure for innovation and productivity. Before joining the World Bank, Davide was an Assistant Professor in Business Economics at the University of Edinburgh Business School and a financial consultant for large European banks. His work has appeared in numerous peer-reviewed academic journals and reports, such as the British Journal of Management, the European Journal of Operational Research, the Journal of Financial Stability, the Global Financial Development Report 2019-2020, and the World Development Report 2022.

Full item page

Publication Search Results

Now showing 1 - 10 of 16

Banking in Africa: Opportunities and Challenges in Volatile Times
(World Bank, Washington, DC, 2023-12-19) Beck, Thorsten; Mare, Davide Salvatore; Valenzuela, Patricio; Mare, Davide S.
This paper surveys existing literature and data to take stock of the current state of banking systems across Sub-Saharan Africa. It documents different dimensions of the development of the banking systems in the region and compares Africa’s banking systems to those of comparable low- and lower-middle-income countries outside the region. The paper also discusses the progress in policies and institutions underpinning financial deepening and the results of specific innovations to reach traditionally unbanked segments of the population, such as innovative branch expansion programs, mobile banking, and new financial products. In view of the COVID-19 pandemic, the paper discusses government support for financial systems and banking sector performance during crises. Overall, the survey shows a picture of achievements and challenges, with progress along some fronts but other challenges persisting even as new ones arise, including the turning of the global financial cycle in 2022/23 and increasing geopolitical tensions.
Bank Capital Regulation and Risk after the Global Financial Crisis
(Elsevier, 2021-05-17) Anginer, Deniz; Bertay, Ata Can; Cull, Robert; Demirguc-Kunt, Asli; Mare, Davide S.
We explore and summarize the evolution in bank capital regulations and bank risk after the global financial crisis. Using a new survey of bank regulation and supervision covering more than 120 economies, we show that regulatory capital increased, but some elements of capital regulations became laxer. Analyzing bank-level data, we also document the importance of defining bank regulatory capital narrowly as the quality of capital matters in reducing bank risk. This is particularly true for banks that have more discretion in the computation of regulatory capital ratios and are subject to weaker market monitoring.
The Role of Financial (Mis)allocation on Real (Mis)allocation: Firm-level Evidence for European Countries
(Washington, DC: World Bank, 2024-06-20) Cusolito, Ana P.; Fattal-Jaef, Roberto N.; Mare, Davide S.; Singh, Akshat V,
This paper leverages the novel methodology by Whited and Zhao (2021) to identify financial distortions and applies it to a sample of 24 European countries. The analyses reveal that less developed economies face more severe financial misallocation. Distortions in the allocation of financial resources raise the relative cost of finance for younger, smaller, and more productive firms. Counterfactual analysis indicates that alleviating financial distortions could boost aggregate productivity by approximately 30-70 percent. On average, 75 percent of these gains across countries result from better access to finance, with the remainder from optimizing the debt-to-equity ratio. The paper also quantifies the link between financial misallocation and real-input allocative inefficiency, showing that reducing financial misallocation from the median to the 25th percentile of the cross-industry distribution can increase aggregate productivity by an average of 5.2 percent. The effect is larger, at 6.4 percent, for industries heavily reliant on external finance.
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; 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.
Digital Payments and the COVID-19 Shock: The Role of Preexisting Conditions in Banking, Infrastructure, Human Capabilities, and Digital Regulation
(Washington, DC: World Bank, 2023-11-14) Cull, Robert; Foster, Vivien; Jolliffe, Dean; Lederman, Daniel; Mare, Davide Salvatore; Malarvizhi, Veerappan; Mare, Davide S.
Treating data collected pre- and post-COVID-19 as a quasi-experiment, this paper examines the importance of presumed enablers and safeguards in driving the observed expansion of digital payments and digital financial inclusion. The analysis interacts drivers of digital payment usage with a country-specific proxy of the severity of the COVID-19 shock, leveraging variation in both the drivers and the quasi-treatment (the COVID-19 shock) to identify the parameters. Although regulation of banks and digital economic activity were correlated with digital payments before and during the pandemic, the capabilities of users and connectivity (to electricity, the internet, and mobile telephony) were responsible for increased use of digital financial services in response to the shock. An interpretation is that governments and the private sector were able to overcome underdeveloped banking systems and weak regulation of the digital economy, but only where there was adequate digital infrastructure, connectivity, and a high share of the population that understood and could make use of digital payments.
Bank Bailouts and Fiscal Contingent Liabilities
(World Bank, Washington, DC, 2023-01-09) Mare, Davide S.; Melecky, Martin; Murina, Hanna
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.
The Innovation Imperative for Developing East Asia
(Washington, DC: World Bank, 2021-02-23) de Nicola, Francesca; Cirera, Xavier; Kuriakose, Smita; Mason, Andrew D.; Tran, Trang Thu; Mare, Davide S.
After a half century of transformative economic progress that moved hundreds of millions of people out of poverty, countries in developing East Asia are facing an array of challenges to their future development. Slowed productivity growth, increased fragility of the global trading system, and rapid changes in technology are all threatening export-oriented, labor-intensive manufacturing—the region’s engine of growth. Significant global challenges—such as climate change and the COVID-19 pandemic—are exacerbating economic vulnerability. These developments raise questions about whether the region’s past model of development can continue to deliver rapid growth and poverty reduction. Against this background, The Innovation Imperative in Developing East Asia aims to deepen understanding of the role of innovation in future development. The report examines the state of innovation in the region and analyzes the main constraints that firms and countries face to innovating. It assesses current policies and institutions, and lays out an agenda for action to spur more innovation-led growth. A key finding of the report is that countries’ current innovation policies are not aligned with their capabilities and needs. Policies need to strengthen the capacity of firms to innovate and support technological diffusion rather than just invention. Policy makers also need to eliminate policy biases against innovation in services, a sector that is growing in economic importance. Moreover, countries need to strengthen key complementary factors for innovation, including firms’ managerial quality, workers’ skills, and finance for innovation. Countries in developing East Asia would also do well to deepen their tradition of international openness, which could foster openness in other parts of the world. Doing so would help sustain the flows of ideas, trade, investment, and people that facilitate the creation and diffusion of knowledge for innovation.
How Binding Is Supervisory Guidance?: Evidence from the European Calendar Provisioning
(World Bank, Washington, DC, 2022-05) Fiordelisi, Franco; Lattanzio, Gabriele; Mare, David S.; Mare, Davide S.
This paper investigates whether banks respond differently to supervisory guidance than to specific regulatory action. Using a sample of subsidiaries of European banks operating in developing countries, the study exploits the sequencing in the supervisory and regulatory implementation of a reform on provisioning for credit losses for identification, generally referred to as European calendar provisioning. While the reform achieved the intended goal of reducing European banks’ nonperforming loan ratios, its effects were greater during the initial implementation of the supervisory guidance than after its enactment as a binding regulation. This finding is consistent with the notion that the subsequent formalization of the supervisory initiative within a regulatory framework achieved limited results because it eliminated the flexibility the regulatory authority had concerning the stringency with which European calendar provisioning was enforced. Finally, the study offers evidence of a mechanism through which policies in advanced economies affect banking outcomes in developing countries to which their local financial authorities should be alert.
Taking Stock of the Financial Sector Policy Response to COVID-19 around the World
(World Bank, Washington, DC, 2020-12) Feyen, Erik; Alonso Gispert, Tatiana; Kliatskova, Tatsiana; Mare, Davide S.
This paper introduces a new global database and a policy classification framework that records the financial sector policy response to the COVID-19 pandemic across 154 jurisdictions. It documents that authorities around the world have taken a diverse array of measures to mitigate financial distress in markets and for borrowers, and to support the provision of critical financial services to the real economy. Measures that focus on the banking sector constitute the majority of policies taken and aim to take advantage of the flexibility embedded in the international standards. However, emerging markets and developing economies tend to rely more on prudential measures that go beyond this embedded flexibility compared with advanced economies, which may reduce bank balance sheet transparency and increase risks. Using Cox proportional hazards and Poisson regressions, the paper takes initial steps to analyze the determinants of policy makers’ responsiveness and activity in emerging markets and developing economies, respectively. The results indicate that policy makers have typically been significantly more responsive and have taken more policy measures in emerging markets and developing economies that are richer and more populous. Countries with higher private debt levels tend to respond earlier with banking sector and liquidity and funding measures. The spread of COVID-19, macro-financial fundamentals, and fiscal and containment policies appear to play a limited role. In a substantially smaller sample, the paper explores the role of banking characteristics and finds that emerging markets and developing economies with higher private credit levels and that have adopted Basel III features have taken fewer policy measures. Future work is necessary for better understanding the country determinants of the policy response as well as the effectiveness and potential unintended consequences of the measures.
Financial Structure and Firm Innovation: Evidence from around the World
(World Bank, Washington, DC, 2021-05) de Nicola, Francesca; Miguel, Faruk; Mare, Davide S.
This paper analyzes the relationship between financial structure and innovation. Analysis of cross-country micro data over 2009–18 shows that a firm’s financial sources matter for the choice to innovate and the extent to which a firm innovates. The relationship is stronger for firms relying on non-bank financial intermediaries and for firms in low-technology sectors. Moreover, the use of external sources of finance is associated with improved prospects of innovation, especially in more financially developed countries. These findings suggest that developing the financial sector can bring benefits in terms of innovation.