Publication: Yemen Financial Sector Diagnostics
Loading...
Date
2024-11-06
ISSN
Published
2024-11-06
Author(s)
Editor(s)
Abstract
Years of conflict have deepened the Yemeni economy’s longstanding reliance on cash. The country’s underdeveloped formal banking and financial infrastructure hinders credit intermediation, and most economic activity is conducted on a cash basis, from day-to-day purchases to large-scale transactions. As in other cash-based economies, liquidity constraints and immediate consumption needs hinder long-term investment and economic development, exacerbating unemployment and slowing wage growth. The conflict has severely inhibited economic activity and distorted the allocation of resources. Prolonged political instability and armed conflict have had a deeply negative impact on Yemen’s economy, yet the country’s financial sector has demonstrated remarkable resilience and adaptability. The main financial players operating in Yemen are banks and money exchangers. This analysis shows that their liquidity-focused business model gives money exchangers an important advantage over banks in Yemen’s cash-dominated economy.
Link to Data Set
Citation
“World Bank. 2024. Yemen Financial Sector Diagnostics. © World Bank. http://hdl.handle.net/10986/42367 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Financial Sector Assessment : Republic of Latvia(Washington, DC, 2012-06)Latvia has a well-developed financial sector, but in the aftermath of the 2008-09 global financial crisis, access to finance has become a major constraint for the development of private enterprises. Credit to the private sector in Latvia, at above 100 percent of Gross Domestic Product, or GDP, is one of the highest in Eastern Europe, after significant growth over the last decade. However, in the aftermath of the 2008-09 financial crisis, credit growth has been negative (average annual growth of -7 percent between FY2009-2011) and access to finance has become one of the most significant obstacles for growth according to enterprises (close to 30 percent of firms identify it as an obstacle in 2009, versus 2 percent before the crisis). This contributed to a significant decline in the volume of private investment, which dropped by 48 percent between 2008 and 2010. Credit constraints are more severe in specific segments, including smaller firms. In response to these challenges, the Government has supported credit to the private sector through various instruments, some of which may need to be reviewed. Support has been provided through various financial instruments aimed at enhancing the accessibility and affordability of credit and implemented trough public bodies and commercial financial intermediaries. It will also be important to ensure the programs create adequate incentives for financial intermediaries to expand services to underserved markets in a sustainable manner, and that the programs lever the established capacity and expertise of robust commercial lenders, minimizing competition with such lenders.Publication Mongolia Financial Sector Assessment(World Bank, Washington, DC, 2012-06)As the Mongolian mortgage market grows rapidly, and the Government of Mongolia (GoM) pursues an ambitious social housing agenda, there is an urgent need for a holistic sector approach. The following three key areas require attention from policymakers: first, there is a need to better balance housing supply and demand, which requires the authorities to focus on prudent mortgage lending standards and supervision, as well as on provision of housing infrastructure and zoned land. Second, it will be important to ensure effective implementation of ongoing and planned public housing finance programs, with a focus on preventing mortgage market distortions in pricing, emphasizing robust planning and rigorous transparency and governance. Third, authorities should aim for better balance in the composition of mortgage funding, with a focus on improvement in the legal and regulatory framework for capital markets, as well as Mongolian Mortgage Corporation (MIK) governance, products and operations. The Mongolian mortgage market is exhibiting strong growth, with portfolio outstanding increasing by 190 percent to Mongolian Tughrik (MNT) 656 billion (US$482 million) between 2009 and end-2011. This represents 8 percent of 2010 gross domestic product (GDP) and 12 percent of the 2011 banking loan book. The sector is highly concentrated, with top 4 lenders accounting for 89 percent of the market, as well as spatially in and around Ulaanbaatar. Housing prices have risen sharply in the last two years, particularly in 2011, when the increase for the predominantly mortgaged market segment was over 36 percent. While mortgage lending growth rates are consistent with the overall growth of household credit, real estate prices significantly outpaced Consumer Price Index (CPI) and GDP growth in 2011. Currently non-performing loans (NPL) are very low due to the unseasoned mortgage portfolio; however, high debt-to-income (DTI) ratio levels may exacerbate future loan age-related and cyclical delinquency increases. Due in part to extreme climatic constraints, shortage of zoned and serviced land, and infrastructure bottlenecks, housing supply is severely constrained. Large-scale, publicly-funded, subsidized housing initiatives, such as the '100,000 Apartments' Program, need to be carefully planned, so that they cause minimal distortion to the broader housing finance market.Publication Financial Sector Assessment : Moldova(Washington, DC, 2005-03)The Financial Sector Assessment Program (FSAP) team produced an Aide Memoire and the following three detailed reports that were reviewed by and delivered to the authorities: 1) technical notes; 2) assessment of compliance with standards and codes; and 3) detailed bank-by-bank stress tests. The Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) section of the report was based on the report of an International Monetary Fund (IMF) technical assistance mission undertaken in April 2004. Although Moldova is the poorest country in Europe, measured by per capita Gross Domestic Product (GDP), the country has achieved some success in building up the framework of a functioning market economy, especially in the banking sector. In addition to the underlying structural weaknesses, there are several potential macroeconomic problems that increase the vulnerability of the financial system. These include: a) the direct financing of the state budget by the central bank against the background of the weak fiscal and external situation; b) dependency on remittances; and c) dollarization, in combination with significant exchange rate volatility.Publication Financial Sector Assessment(World Bank, Washington, DC, 2012-06)Owing primarily to extensive investment in new mining projects, Mongolia's economy is on a path of very rapid long-term growth. While financial intermediation in Mongolia has been growing fast, access to finance remains a critical constraint for enterprises, and especially for Small and Medium Enterprises (SMEs). Improving access to financial services will require strengthening the legal and regulatory framework and financial infrastructure, including the secured transactions framework, creditor rights and insolvency regime, credit information sharing system, platform for technology-based banking products, regulation and supervision of nonbank financial institutions, and consumer protection in financial services. To realize fully its economic potential, Mongolia needs to build a diversified, efficient and stable financial system, capable of intermediating both on a large scale and in specific market segments. Due to its focus on the development agenda, and specifically on access to finance for the SME sector, capital markets development, and housing finance market development, this report does not address financial sector stability issues. Financial intermediation in Mongolia has grown significantly in recent years; credit and deposit penetration are on par with the average in the East Asia and the Pacific (EAP) region. Access to finance is particularly constrained for SMEs, which are also more sensitive to an unstable macroeconomic environment, characterized by high inflation and exchange rate fluctuations.Publication Financial Sector Assessment Program Update : Republic of Kazakhstan - Investment Opportunities for Pension Funds(World Bank, Washington, DC, 2004-08)The objective of this note is to put forward policy alternatives that could lead to improved management of pension fund assets in Kazakhstan. This note emphasizes prudence in the management of pension assets, given the social and fiscal importance of the pension sector. It also discusses different investment alternatives and development options for the domestic Kazakhstani capital market. The note aims to be realistic and pragmatic, based on the best professional judgment of the author.1 It is concluded that neither the regulators nor industry participants appear to fully appreciate the risks attached to the practice of focusing on short-term and high yield investments, which exposes pensioners to higher reinvestment and issuer risk. The recommendations are summarized in the last section of this note.
Users also downloaded
Showing related downloaded files
Publication Supporting Youth at Risk(World Bank, Washington, DC, 2008)The World Bank has produced this policy Toolkit in response to a growing demand from our government clients and partners for advice on how to create and implement effective policies for at-risk youth. The author has highlighted 22 policies (six core policies, nine promising policies, and seven general policies) that have been effective in addressing the following five key risk areas for young people around the world: (i) youth unemployment, underemployment, and lack of formal sector employment; (ii) early school leaving; (iii) risky sexual behavior leading to early childbearing and HIV/AIDS; (iv) crime and violence; and (v) substance abuse. The objective of this Toolkit is to serve as a practical guide for policy makers in middle-income countries as well as professionals working within the area of youth development on how to develop and implement an effective policy portfolio to foster healthy and positive youth development.Publication World Development Report 2019(Washington, DC: World Bank, 2019)Work is constantly reshaped by technological progress. New ways of production are adopted, markets expand, and societies evolve. But some changes provoke more attention than others, in part due to the vast uncertainty involved in making predictions about the future. The 2019 World Development Report will study how the nature of work is changing as a result of advances in technology today. Technological progress disrupts existing systems. A new social contract is needed to smooth the transition and guard against rising inequality. Significant investments in human capital throughout a person’s lifecycle are vital to this effort. If workers are to stay competitive against machines they need to train or retool existing skills. A social protection system that includes a minimum basic level of protection for workers and citizens can complement new forms of employment. Improved private sector policies to encourage startup activity and competition can help countries compete in the digital age. Governments also need to ensure that firms pay their fair share of taxes, in part to fund this new social contract. The 2019 World Development Report presents an analysis of these issues based upon the available evidence.Publication China Economic Update, June 2024(Washington, DC: World Bank, 2024-06-14)Economic activity picked up in China in early 2024, buoyed by stronger exports. Meanwhile, growth in domestic demand moderated. Manufacturing and infrastructure investment and consumer spending on services remained robust, while the property market correction continued. In the long term, China’s rapidly aging population will have wide-ranging economic impacts, but with the right policies the demographic transition is manageable. The economic challenges from an aging population can be overcome with policies that increase labor force participation and extend productive working lives. Affordable childcare, better work-life balance, elimination of gender bias in hiring, a higher retirement age, skills upgrading, and lifelong learning are measures that could expand China’s workforce and make it more productive.Publication Ten Steps to a Results-Based Monitoring and Evaluation System : A Handbook for Development Practitioners(Washington, DC: World Bank, 2004)An effective state is essential to achieving socio-economic and sustainable development. With the advent of globalization, there are growing pressures on governments and organizations around the world to be more responsive to the demands of internal and external stakeholders for good governance, accountability and transparency, greater development effectiveness, and delivery of tangible results. Governments, parliaments, citizens, the private sector, Non-governmental Organizations (NGOs), civil society, international organizations, and donors are among the stakeholders interested in better performance. As demands for greater accountability and real results have increased, there is an attendant need for enhanced results-based monitoring and evaluation of policies, programs, and projects. This handbook provides a comprehensive ten-step model that will help guide development practitioners through the process of designing and building a results-based monitoring and evaluation system. These steps begin with a 'readiness assessment' and take the practitioner through the design, management, and importantly, the sustainability of such systems. The handbook describes each step in detail, the tasks needed to complete each one, and the tools available to help along the way.Publication Zimbabwe(World Bank, Washington, DC, 2019-03-01)This report presents an assessment of Zimbabwe’s agriculture sector disaster risk and management capacity. The findings indicate that Zimbabwe is highly exposed to agricultural risks and has limited capacity to manage risk at various levels. The report shows that disaster-related shocks along Zimbabwe’s agricultural supply chains directly translate to volatility in agricultural GDP. Such shocks have a substantial impact on economic growth, food security, and fiscal balance. When catastrophic disasters occur, the economy absorbs the shocks, without benefiting from any instruments that transfer the risk to markets and coping ability. The increasing prevalence of ‘shock recovery-shock’ cycles impairs Zimbabwe’s ability to plan and pursue a sustainable development path. The findings presented here confirm that it is highly pertinent for Zimbabwe to strengthen the capacity to manage risk at various levels, from the smallholder farmer, to other participants along the supply chain, to consumers (who require a reliable, safe food supply), and ultimately to the government to manage natural disasters. The assessment provides the following evidence on sources of risks and plausible risk management solutions. It is our hope that the report contributes to action by the Government of Zimbabwe to adopt a proactive and integrated risk management strategy appropriate to the current structure of the agricultural sector.