Rahman, Md. HabiburBeck, Thorsten2012-06-192012-06-192006-06https://hdl.handle.net/10986/8441While Bangladesh has embarked on a path to reform its financial system, most prominently by privatizing its government-owned banks, the Nationalized Commercial Banks (NCBs), a sustainable long-term expansion of the financial system requires a more substantial change in the role of government. Using recent research and international comparisons, this paper argues that the government should move from its role as an operator and arbiter in the financial system to a facilitator role. This implies not only divestment from government-owned banks, but also de-politicization of the licensing process and a market-based bank failure resolution framework that focuses on intermediation and not on the rescue of individual institutions. Most important, the government should move away from the implicit guarantee for depositors and owners to applying the existing limited explicit deposit insurance for depositors, while simultaneously relying more on market participants to monitor and discipline banks instead of micro-managing financial institutions. This redefinition of government's role should not be limited to the banking system, but applies to other segments of the financial system, such as capital markets and the micro-finance sector, and should be seen as an essential element in the governance reform agenda and in the movement from a relationship-based economy to a market and arms-length economy.CC BY 3.0 IGOACCOUNTINGACCOUNTING STANDARDSADBADVERSE SELECTIONAGRICULTURAL BANKSAGRICULTUREAUDITINGAUTOREGRESSIONBALANCE SHEETSBANK ACCOUNTSBANK BRANCHESBANK DEPOSITSBANK FAILUREBANK FAILURE RESOLUTIONBANK LOANSBANK RUNSBANKING CRISESBANKING SECTORBANKING SERVICESBANKING SYSTEMBANKRUPTCYBANKRUPTCY COURTSBANKSBENCHMARKBENCHMARKINGBORROWINGBROKERSCAPITAL MARKETSCAPITALIZATIONCOMMERCIAL BANKSCOMPANYCOMPETITIVENESSCONFLICTS OF INTERESTCONSUMER PRICE INDEXCONTROLLING SHAREHOLDERCORPORATE DECISIONSCORPORATE GOVERNANCECORPORATIONSCOUNTRY COMPARISONSDEBTDEPOSIT ACCOUNTSDEPOSIT INSURANCEDEPOSITSDIVESTMENTDIVIDENDSEARNING ASSETSECONOMIC GROWTHEMPLOYMENTEXCHANGE COMMISSIONEXPECTED RETURNEXTERNAL FINANCINGFINANCIAL CONTRACTSFINANCIAL INSTITUTIONSFINANCIAL INTERMEDIARIESFINANCIAL INTERMEDIARY DEVELOPMENTFINANCIAL INTERMEDIATIONFINANCIAL MARKETSFINANCIAL REGULATIONFINANCIAL REPORTSFINANCIAL SECTORFINANCIAL SERVICESFINANCIAL STATEMENTSFINANCIAL SYSTEMSFINANCIAL TRANSACTIONSGDP PER CAPITAGROWTH RATEHUMAN CAPITALINCOMEINCORPORATEDINDIVIDUALSINFLATIONINFLATION RATEINFLATION RATESINITIAL PUBLIC OFFERINGSINSIDE INFORMATIONINSTITUTIONAL INVESTORSINTEREST COSTSINTEREST RATEINTEREST RATESINVESTMENT ACTIVITIESINVESTMENT ACTIVITYINVESTMENT PROJECTSIPOSJOINT STOCK COMPANIESLEGISLATIONLENDING PRACTICESLEVEL PLAYING FIELDLIMITEDLIMITED LIABILITYLIMITED LIABILITY COMPANIESLIQUIDATIONLIQUIDITYM2MACROECONOMIC STABILITYMARKET DISCIPLINEMICROFINANCEMINORITY SHAREHOLDERMINORITY SHAREHOLDERSMORAL HAZARDMUTUAL FUNDMUTUAL FUNDSNATIONALIZED BANKSOPERATING COSTSOVERHEAD COSTSPAYOUTPER CAPITA INCOMEPORTFOLIOPRINCIPAL-AGENTPRINCIPAL-AGENT PROBLEMSPRIVATE COMMERCIAL BANKSPRIVATE EQUITYPRIVATE PENSIONPRIVATE PROPERTYPRIVATIZATIONPROPERTY RIGHTSPROTECTION OF MINORITY SHAREHOLDERPUBLIC FIRMSRATE OF RETURNREAL GDPREGULATORY CAPTURERESOURCE ALLOCATIONRETAINED EARNINGSSAVINGSSAVINGS SCHEMESSECURITIESSHAREHOLDER RIGHTSSOCIETYSOUTH ASIANSTATEMENTSSTOCK EXCHANGESTOCK MARKETSTOCK MARKETSSTOCK PRICESTOCKSTIME DEPOSITSTOTAL COSTSTRADABLE SECURITIESTRANSACTION COSTSTRANSPARENCYWEALTHWORKING CAPITALWorld Bank10.1596/1813-9450-3938