Financial Sector Inefficiencies and the Debt Laffer Curve
The authors analyze the implications of inefficient financial intermediation for dbt management, using a model in which firms rely on bank credit to finance their working capital needs, and, lenders face a high state verification and enforcement co...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2002/05/1790966/financial-sector-inefficiencies-debt-laffer-curve http://hdl.handle.net/10986/14799 |
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okr-10986-147992021-04-23T14:03:20Z Financial Sector Inefficiencies and the Debt Laffer Curve Agénor, Pierre-Richard Aizenman, Joshua FINANCIAL INTERMEDIATION DEBT MANAGEMENT BANK CREDIT COST OF CAPITAL LOAN COLLATERAL CONTRACT ENFORCEMENT VERIFICATION MEASURES PRODUCTIVITY ECONOMYWIDE SCHEMES LAFFER CURVE OUTPUTS WELFARE ECONOMICS DEBT RELIEF REFORM POLICY ACCOUNTING ASYMMETRIC INFORMATION BANK LENDING BANK LOANS BANKING SECTOR BANKRUPTCY BANKRUPTCY PROCEDURES BORROWING CAPITAL MARKETS COAL CONTAGION CONTRACT ENFORCEMENT COST OF CAPITAL CREDIT MARKETS CREDITOR CREDITORS DEBT DEBT MANAGEMENT DEBT OBLIGATIONS DEBT OVERHANG DEBT REDUCTION DEBT RELIEF DEBT REPAYMENT DEBT SERVICE DEBTORS DEFAULT RISK DEFAULTS DEVELOPMENT ECONOMICS DISCOUNT RATE ECONOMETRIC ANALYSIS ECONOMIC ACTIVITY ECONOMIC EFFICIENCY ECONOMIC RESEARCH ECONOMIC THEORY ECONOMISTS EMPLOYMENT EQUILIBRIUM EXCHANGE RATE EXPECTED VALUE EXTERNAL DEBT EXTERNALITIES FACE VALUE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FOREIGN BANKS FOREIGN DEBT GDP GENERAL EQUILIBRIUM MODEL ILLIQUIDITY IMPORTS INCENTIVE EFFECTS INCOME INEFFICIENCY INTEREST RATE LABOR COSTS LAFFER CURVE LENDING PRACTICES LENDING RATES MARKET INTEGRATION MARKET VALUE MICROECONOMICS MORAL HAZARD NET PROFIT NONPERFORMING LOANS PRIVATE BANKING PRIVATIZATION PROBABILITY OF DEFAULT PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY REPAYMENT RISK PREMIUM SAVINGS TIME SERIES TRANSITION ECONOMIES VALUE OF OUTPUT WEALTH WELFARE GAINS WORKING CAPITAL The authors analyze the implications of inefficient financial intermediation for dbt management, using a model in which firms rely on bank credit to finance their working capital needs, and, lenders face a high state verification and enforcement costs of loan contracts. Their analysis shows that lower expected productivity, higher contract enforcement, and verification costs, or higher volatility of productivity shocks may shift the economy to the wrong side of the debt Laffer curve, with potentially sizable output, and welfare losses. The main implication of this analysis is that debt relief may generate little welfare gains, unless is accompanied by reforms aimed at reducing financial sector inefficiencies. 2013-08-05T17:57:55Z 2013-08-05T17:57:55Z 2002-05 http://documents.worldbank.org/curated/en/2002/05/1790966/financial-sector-inefficiencies-debt-laffer-curve http://hdl.handle.net/10986/14799 English en_US Policy Research Working Paper;No.2842 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
FINANCIAL INTERMEDIATION DEBT MANAGEMENT BANK CREDIT COST OF CAPITAL LOAN COLLATERAL CONTRACT ENFORCEMENT VERIFICATION MEASURES PRODUCTIVITY ECONOMYWIDE SCHEMES LAFFER CURVE OUTPUTS WELFARE ECONOMICS DEBT RELIEF REFORM POLICY ACCOUNTING ASYMMETRIC INFORMATION BANK LENDING BANK LOANS BANKING SECTOR BANKRUPTCY BANKRUPTCY PROCEDURES BORROWING CAPITAL MARKETS COAL CONTAGION CONTRACT ENFORCEMENT COST OF CAPITAL CREDIT MARKETS CREDITOR CREDITORS DEBT DEBT MANAGEMENT DEBT OBLIGATIONS DEBT OVERHANG DEBT REDUCTION DEBT RELIEF DEBT REPAYMENT DEBT SERVICE DEBTORS DEFAULT RISK DEFAULTS DEVELOPMENT ECONOMICS DISCOUNT RATE ECONOMETRIC ANALYSIS ECONOMIC ACTIVITY ECONOMIC EFFICIENCY ECONOMIC RESEARCH ECONOMIC THEORY ECONOMISTS EMPLOYMENT EQUILIBRIUM EXCHANGE RATE EXPECTED VALUE EXTERNAL DEBT EXTERNALITIES FACE VALUE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FOREIGN BANKS FOREIGN DEBT GDP GENERAL EQUILIBRIUM MODEL ILLIQUIDITY IMPORTS INCENTIVE EFFECTS INCOME INEFFICIENCY INTEREST RATE LABOR COSTS LAFFER CURVE LENDING PRACTICES LENDING RATES MARKET INTEGRATION MARKET VALUE MICROECONOMICS MORAL HAZARD NET PROFIT NONPERFORMING LOANS PRIVATE BANKING PRIVATIZATION PROBABILITY OF DEFAULT PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY REPAYMENT RISK PREMIUM SAVINGS TIME SERIES TRANSITION ECONOMIES VALUE OF OUTPUT WEALTH WELFARE GAINS WORKING CAPITAL |
| spellingShingle |
FINANCIAL INTERMEDIATION DEBT MANAGEMENT BANK CREDIT COST OF CAPITAL LOAN COLLATERAL CONTRACT ENFORCEMENT VERIFICATION MEASURES PRODUCTIVITY ECONOMYWIDE SCHEMES LAFFER CURVE OUTPUTS WELFARE ECONOMICS DEBT RELIEF REFORM POLICY ACCOUNTING ASYMMETRIC INFORMATION BANK LENDING BANK LOANS BANKING SECTOR BANKRUPTCY BANKRUPTCY PROCEDURES BORROWING CAPITAL MARKETS COAL CONTAGION CONTRACT ENFORCEMENT COST OF CAPITAL CREDIT MARKETS CREDITOR CREDITORS DEBT DEBT MANAGEMENT DEBT OBLIGATIONS DEBT OVERHANG DEBT REDUCTION DEBT RELIEF DEBT REPAYMENT DEBT SERVICE DEBTORS DEFAULT RISK DEFAULTS DEVELOPMENT ECONOMICS DISCOUNT RATE ECONOMETRIC ANALYSIS ECONOMIC ACTIVITY ECONOMIC EFFICIENCY ECONOMIC RESEARCH ECONOMIC THEORY ECONOMISTS EMPLOYMENT EQUILIBRIUM EXCHANGE RATE EXPECTED VALUE EXTERNAL DEBT EXTERNALITIES FACE VALUE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FOREIGN BANKS FOREIGN DEBT GDP GENERAL EQUILIBRIUM MODEL ILLIQUIDITY IMPORTS INCENTIVE EFFECTS INCOME INEFFICIENCY INTEREST RATE LABOR COSTS LAFFER CURVE LENDING PRACTICES LENDING RATES MARKET INTEGRATION MARKET VALUE MICROECONOMICS MORAL HAZARD NET PROFIT NONPERFORMING LOANS PRIVATE BANKING PRIVATIZATION PROBABILITY OF DEFAULT PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY REPAYMENT RISK PREMIUM SAVINGS TIME SERIES TRANSITION ECONOMIES VALUE OF OUTPUT WEALTH WELFARE GAINS WORKING CAPITAL Agénor, Pierre-Richard Aizenman, Joshua Financial Sector Inefficiencies and the Debt Laffer Curve |
| relation |
Policy Research Working Paper;No.2842 |
| description |
The authors analyze the implications of
inefficient financial intermediation for dbt management,
using a model in which firms rely on bank credit to finance
their working capital needs, and, lenders face a high state
verification and enforcement costs of loan contracts. Their
analysis shows that lower expected productivity, higher
contract enforcement, and verification costs, or higher
volatility of productivity shocks may shift the economy to
the wrong side of the debt Laffer curve, with potentially
sizable output, and welfare losses. The main implication of
this analysis is that debt relief may generate little
welfare gains, unless is accompanied by reforms aimed at
reducing financial sector inefficiencies. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Agénor, Pierre-Richard Aizenman, Joshua |
| author_facet |
Agénor, Pierre-Richard Aizenman, Joshua |
| author_sort |
Agénor, Pierre-Richard |
| title |
Financial Sector Inefficiencies and the Debt Laffer Curve |
| title_short |
Financial Sector Inefficiencies and the Debt Laffer Curve |
| title_full |
Financial Sector Inefficiencies and the Debt Laffer Curve |
| title_fullStr |
Financial Sector Inefficiencies and the Debt Laffer Curve |
| title_full_unstemmed |
Financial Sector Inefficiencies and the Debt Laffer Curve |
| title_sort |
financial sector inefficiencies and the debt laffer curve |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2002/05/1790966/financial-sector-inefficiencies-debt-laffer-curve http://hdl.handle.net/10986/14799 |
| _version_ |
1764429975696441344 |