Reforming Financial Systems: Historical Implications for Policy

by Edited by Gerard Caprio, Jr. , Dimitri Vittas

• ISBN13: 9780521581158
• ISBN10: 052158115X
• Format: Hardcover
• Copyright: 1997-06-13
• Publisher: Cambridge University Press

Summary

This volume summarizes the key lessons of financial history for emerging markets and developing economies today, including the rise and role of central banks, debates on how to make banking secure and sound, the relative efficiency of universal banking compared to the Anglo-American commercial banking model, and the role of savings banks, non-banks and securities markets in development. Two lessons that should be kept in mind in reforming financial systems are the importance of incentives and diversification. Robust financial systems require incentive systems that reward prudent risk-taking and encourage sound portfolio diversification. In addition, reputation has proved to be important: central bankers must demonstrate anew why they have earned a reputation for non-inflationary policies, and private intermediaries must similarly demonstrate again why they have earned a reputation for sound, as opposed to Ponzi, finance. Attempts to reform financial systems without due allowance for the time and effort to develop institutions, including reputation, are likely to prove short-lived.

Table of Contents

List of contributors	vii	(2)
Foreword	ix
1 Financial history: Lessons of the past for reformers of the present	1	(21)
Gerard Caprio, Jr.
Dimitri Vittas
2 The evolution of central banking	22	(19)
Forrest Capie
3 Free banking: The Scottish experience as a model for emerging economies	41	(24)
Randall S. Kroszner
4 Regulation and bank stability: Canada and the United States, 1870-1980	65	(20)
Michael Bordo
Deposit insurance	85	(16)
Eugene White
Contingent liability in banking: Useful policy for developing countries?	101	(12)
Anthony Saunders
Berry Wilson
7 Universal banking and the financing of industrial development	113	(15)
Charles W. Calomiris
8 Before main banks: A selective historical overview of Japan's prewar financial system	128	(13)
Frank Packer
9 Thrift deposit institutions in Europe and the United States	141	(39)
Dimitri Vittas
10 The development of industrial pensions in the United States during the twentieth century	180	(18)
Samuel H. Williamson
11 The rise of securities markets: What can government do?	198	(19)
Richard Sylla
Index	217