Bossone, BiagioPromisel, Larry2017-06-132017-06-132012https://hdl.handle.net/10986/27109An international cooperative effort has been focused on the need to reduce financial fragility and systemic risks in global financial markets. Work is proceeding in three different areas: enhancing financial market transparency, improving the international financial architecture, and strengthening financial systems. Strengthening financial systems (the focus of this paper) means cooperating to promote principles and sound practices for financial stability through development of well-functioning financial systems and market discipline. Financial sector reform and development is much more than setting rules, articulating standards, approving legislation, and creating new institutions. All are important but ultimately behavior must be changed if there is to be meaningful and lasting financial reform. For that reason, this paper emphasizes the role of incentives to induce appropriate behavior. Developing countries have made important progress toward improved financial supervision in the past few years. Reforming financial sectors is a lengthy and complex process of institution building and incentive reorientation, whose success requires full ownership of, and participation in, the process by society and its government.en-USCC BY 3.0 IGOACCOUNTABILITYACCOUNTINGACCOUNTING PRACTICESACCOUNTING PRINCIPLESAFFILIATESARBITRAGEAUDITINGAUDITORSBAILOUTSBANK FAILURESBANK FOR INTERNATIONAL SETTLEMENTSBANK LIQUIDITYBANK LOANSBANK PRIVATIZATIONBANK RECAPITALIZATIONBANKING CRISESBANKING INDUSTRYBANKING REGULATIONBANKING SERVICESBANKING SYSTEMBANKING SYSTEMSBANKSBASLE ACCORDBONDSBORROWERBORROWING COSTSBROAD MONEYCAPITAL ADEQUACYCAPITAL ALLOCATIONSCAPITAL BASECAPITAL FLOWSCAPITAL MARKETCAPITAL MARKET DEVELOPMENTCAPITAL MARKETSCAPITAL REQUIREMENTSCAPITALIZATIONCENTRAL BANKSCLEARING BANKSCLEARING HOUSECLEARING HOUSESCOMMERCIAL BANKCOMMERCIAL BANKSCOMMERCIAL BANKS CREDITCOMMERCIAL PROPERTYCOMMUNITY BANKSCONSOLIDATED SUPERVISIONCORPORATE DEBTCORPORATE GOVERNANCECREDIBILITYCREDIT ASSESSMENTCREDIT DISCIPLINECREDIT EXPANSIONCREDIT RISKCREDITORSCREDITWORTHY BORROWERSCRISIS COUNTRIESDEBTDEBT CRISISDEPOSITDEPOSIT INSURANCEDEPOSIT INSURANCE SCHEMESDEPOSITORSDEPOSITSDEVELOPING COUNTRIESDISINTERMEDIATIONDOMESTIC BANKSDOMESTIC BORROWINGDOMESTIC CAPITALDOMESTIC CAPITAL MARKETSDOMESTIC FINANCIAL MARKETSDOMESTIC MARKETDOMESTIC MARKETSECONOMIC DEVELOPMENTEMERGING ECONOMIESEMPLOYMENTEQUITIESEQUITY MARKETSEXCHANGE RATEEXTERNALITIESFEDERAL DEPOSIT INSURANCEFEDERAL DEPOSIT INSURANCE CORPORATIONFINANCIAL CRISESFINANCIAL CRISISFINANCIAL DISTRESSFINANCIAL FRAGILITYFINANCIAL INFORMATIONFINANCIAL INSTITUTIONSFINANCIAL LIBERALIZATIONFINANCIAL MANAGEMENTFINANCIAL MARKETFINANCIAL MARKET PARTICIPANTSFINANCIAL MARKETSFINANCIAL REFORMFINANCIAL REGULATIONFINANCIAL RISKFINANCIAL SECTOR DEVELOPMENTFINANCIAL SERVICESFINANCIAL STABILITYFINANCIAL STRENGTHFINANCIAL STRUCTUREFINANCIAL SYSTEMFINANCIAL SYSTEMSFINANCIAL TRANSACTIONSFLOW OF INFORMATIONFOREIGN BANKFOREIGN BANKSFOREIGN ENTRYFOREIGN EXCHANGEFOREIGN FINANCIAL INSTITUTIONSFOREIGN INVESTMENTGLOBAL ECONOMYGOVERNMENT INTERVENTIONHUMAN CAPITALHUMAN RESOURCESIMPLICIT GOVERNMENT GUARANTEEIMPLICIT GOVERNMENT GUARANTEESINCOME LEVELINDEBTEDNESSINFORMAL FINANCEINFORMAL FINANCIERSINSTITUTIONAL INVESTORSINTEREST RATESINTERNAL CONTROLSINTERNATIONAL CAPITALINTERNATIONAL MARKETSINVENTORYINVESTMENT OPPORTUNITIESINVESTMENT STRATEGIESINVESTOR BASELAWSLEGAL RIGHTSLEGAL SYSTEMLEGAL SYSTEMSLEGISLATIONLENDER OF LAST RESORTLENDERSLIQUIDATIONLYONMACROECONOMIC STABILITYMACROECONOMIC STABILIZATIONMARKET CAPITALIZATIONMARKET DATAMARKET DEVELOPMENTMARKET DISCIPLINEMARKET ECONOMIESMARKET ENTRYMARKET FAILURESMARKET INFRASTRUCTURESMARKET LIQUIDITYMARKET RISKSMARKET TRANSPARENCYMARKET VALUEMATURITYMATURITY SPECTRUMMERCHANT BANKSMONEY CENTER BANKSMORAL HAZARDNATURAL RESOURCESOPEN MARKETSOPPORTUNITY COSTPAYMENT SYSTEMSPENALTIESPENSIONPENSION REFORMPOLITICAL STABILITYPORTFOLIOPORTFOLIOSPRICE SETTINGPRIVATE BANKSPRIVATE DEBTPRIVATIZATIONPRODUCTIVITYPROFIT OPPORTUNITIESPROFITABILITYPROPERTY TAXESPRUDENTIAL REGULATIONPRUDENTIAL SUPERVISIONRATING AGENCIESREAL SECTORRECAPITALIZATIONREGULATORY FRAMEWORKREGULATORY PRACTICESREGULATORY SYSTEMSREORGANIZATIONRESERVE ASSETSRESERVE REQUIREMENTSRESOURCE ALLOCATIONRETURNRETURNSRISK CONTROLRISK EXPOSURESRISK MANAGEMENTRISK TAKINGSAFETY NETSSAVINGSSECURITIESSETTLEMENTSHARE OF CREDITSTOCK MARKETSTOCK MARKETSSTRUCTURAL ADJUSTMENTSUBORDINATED DEBTSUBSIDIARIESSUPERVISORY AUTHORITIESSUPERVISORY REGIMESSYSTEMIC RISKTECHNICAL ASSISTANCETELECOMMUNICATIONSTRANSACTION COSTSTRANSACTIONS COSTSTRANSITION ECONOMIESTURNOVERWITHDRAWALWITHDRAWAL OF FUNDSWorking PaperWorld Bank10.1596/27109