Financial Sector Conditionality: Is Tougher Better?

By Roger P. Kronenberg, Alessandro Giustiniani

December 1, 2005

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Roger P. Kronenberg, and Alessandro Giustiniani. Financial Sector Conditionality: Is Tougher Better?, (USA: International Monetary Fund, 2005) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The aim of this paper is to take a closer look at IMF conditionality in the banking sector. Our analysis shows that while such conditionality became more stringent following the Asian crisis, compliance has remained broadly unchanged, comparing unfavorably with other structural reforms. The results of panel data regressions show that while compliance with IMF-supported banking sector reform strategies has contributed to an improvement in banking sector performance, increases in the hardness and intensity of IMF conditionality may not be, ceteris paribus, effective. The policy implication is that the IMF should, therefore, continue its efforts in enhancing countries' ownership and streamlining conditionality.

Subject: Bank resolution, Banking, Commercial banks, Financial sector, Structural reforms

Keywords: Banking sector, Banking sector conditionality, Country, IMF arrangement, Process, Reform strategy, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2005/230
Stock No:

WPIEA2005230
ISBN:

9781451862492
ISSN:

1018-5941

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