World Bank Group2014-09-122014-09-122014https://hdl.handle.net/10986/20099Nepal needs a new economic model to achieve faster and sustained growth as well as further improvements in human development and poverty outcomes. Economic growth, while ro¬bust at around 4 percent annual average since 2005, is far from the level needed to achieve the government s ambitious targets. The economy, highly dependent on remittances, lacks the nec¬essary dynamism. While substantial gains have been made to reduce poverty and expand access to services, achieving further progress will require more determined and targeted state intervention. To redefine Nepal s growth model, public policy should focus on 3 I s: Investment, In¬frastructure, and Inclusion. Investment is the bedrock of a sustainable growth model but in Nepal, the state, firms and households critically under-invest, with gross fixed capital formation between 19.9 and 22.2 percent of GDP over the past decade (compared to 30 percent or more in fast-growing countries in East Asia). In order to unlock investment as well as to expand access to services and opportunities for all, public infra¬structure is critical, but Nepal is under-connected and under-powered. Finally, growth alone will not deliver continued fast progress on inequality and poverty reduction unless the growth model is calibrated for inclusion, which in turn can help sustain dynamic growth.en-USCC BY 3.0 IGOACCESS TO FINANCEACCESS TO FINANCIAL SERVICESACCESS TO INFORMATIONACCOUNTINGANTI-MONEY LAUNDERINGBALANCE OF PAYMENTSBALANCE SHEETSBANK ACCOUNTBANKING ASSETSBANKING CRISESBANKING SECTORBANKING SERVICESBANKING SYSTEMBANKRUPTCYBRANCH LICENSINGBUDGETINGCAPACITY BUILDINGCAPACITY CONSTRAINTCAPITAL ADEQUACYCAPITAL FORMATIONCAPITAL INVESTMENTCAPITAL OUTLAYSCAPITAL RAISINGCAPITAL STRUCTURECASH TRANSFERSCOLLATERALCOLLATERAL REQUIREMENTSCOMMERCIAL BANKCOMMERCIAL BANK BRANCHESCOMMERCIAL BANKSCOMPLIANCE COSTCONTINGENT LIABILITIESCOUNTRY RISKCREDIT AGENCIESCREDIT CRUNCHCREDIT CULTURECREDIT GROWTHCREDIT GUARANTEECREDIT INFORMATIONCREDIT INFORMATION BUREAUCREDIT INFORMATION BUREAUSCREDIT LINECREDIT MARKETSCREDIT QUALITYCREDIT WORTHINESSCREDITORSCREDITWORTHINESSDEBTDEBT FINANCINGDEBT RECOVERYDECENTRALIZATIONDEFICITSDEPOSITDEPOSIT INSURANCEDEPOSITORDEPOSITORSDEPOSITSDEVELOPING COUNTRIESDEVELOPMENT BANKDEVELOPMENT CORPORATIONDOMESTIC CREDITECONOMIC ACTIVITYECONOMIC GROWTHEDUCATION LEVELENABLING ENVIRONMENTENFORCEMENT MECHANISMSENFORCEMENT PROCEDURESEQUIPMENTEQUITY CAPITALEXPENDITUREEXPENDITURESEXPORT COMPETITIVENESSEXPORT GROWTHEXPORTERSFINANCIAL ACCESSFINANCIAL CONTAGIONFINANCIAL CRISISFINANCIAL INFRASTRUCTUREFINANCIAL INSTITUTIONFINANCIAL INSTITUTIONSFINANCIAL MANAGEMENTFINANCIAL MARKETFINANCIAL PRODUCTSFINANCIAL STABILITYFINANCIAL SUPPORTFINANCIAL SYSTEMFISCAL DISCIPLINEFIXED CAPITALFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE TRANSACTIONSFOREIGN INVESTMENTFOREIGN INVESTMENTSFOREIGN INVESTORSFORMAL FINANCIAL INSTITUTIONSFORMAL FINANCIAL SECTORGENDERGENDER GAPGOVERNMENT GUARANTEEGOVERNMENT POLICYGUARANTEE FUNDIMPLICIT GUARANTEEINCOME LEVELINCOME LEVELSINCOME TAXINEQUALITYINFORMATION ASYMMETRIESINFORMATION ASYMMETRYINFORMATION SYSTEMINFORMATION SYSTEMSINFORMATION TECHNOLOGYINFRASTRUCTURE DEVELOPMENTINTEREST RATEINTEREST RATE CAPSINTEREST RATE SPREADINTEREST RATESINTERMEDIATION SPREADINTERNAL AUDITINTERNATIONAL DEVELOPMENTINTERNATIONAL FINANCEINTERNATIONAL SETTLEMENTINTERNATIONAL STANDARDSINVENTORYINVESTINGINVESTMENT CLIMATEINVESTMENT CLIMATESINVESTMENT FLOWSINVESTMENT PLANINVESTMENT POLICYINVESTMENT PROJECTSINVESTMENT STRATEGYISSUANCEKEY CHALLENGEKEY CHALLENGESLABOR MARKETLEASE AGREEMENTLEGAL ASSISTANCELEGAL AUTHORITYLEGAL FRAMEWORKLEGAL INSTRUMENTSLEGAL TOOLSLEGISLATIVE FRAMEWORKLENDERSLENDING DECISIONSLENDING REQUIREMENTLENDING SPREADLIABILITYLINE OF CREDITLIQUIDITYLIQUIDITY PROBLEMSLIVING STANDARDSLOANLOAN MATURITYLOCAL GOVERNMENTLOCAL GOVERNMENTSLOCAL INFRASTRUCTUREMACROECONOMIC STABILITYMARKET ACCESSMARKET SHAREMFIMICRO FINANCEMINIMUM CAPITAL ADEQUACY RATIOMINIMUM CAPITAL REQUIREMENTMONETARY FUNDNEGATIVE SHOCKNON PERFORMING LOANSNON-PERFORMING LOANSNPLNUTRITIONOUTPUT LOSSPARTIAL RISKPAYMENT SYSTEMPENSIONSPOLITICAL ECONOMYPOLITICAL STABILITYPOLITICAL UNCERTAINTYPORTFOLIOPORTFOLIO INVESTMENTPRIVATE BANKSPRIVATE CREDITPRIVATE FUNDSPRIVATE INVESTORSPRIVATE SECTOR BANKSPRODUCTIVE INVESTMENTPUBLIC FINANCESPUBLIC INVESTMENTPUBLIC RECORDSPUBLIC SPENDINGREAL ESTATEREGULATORY FRAMEWORKREMITTANCEREMITTANCESRESERVERETURNSSAFETY NETSAVINGS ACCOUNTSHAREHOLDERSSOCIAL RESPONSIBILITYSOLVENCYSTATE GUARANTEESUPPLY OF CREDITTAX RATESTAX SYSTEMTECHNICAL ASSISTANCETELECOMMUNICATIONSTERRORISMTRADE CREDITTRADE FINANCETRADE UNIONTRADINGTRANSACTIONTRANSPARENCYTREASURYTRUST FUNDTURNOVERVILLAGEWITHHOLDING TAXWORKING CAPITAL10.1596/20099