Stoyan Tenev

ABSTRACT China's progress in fixing its banking system has surprised observers. Successful experiments, some of them involving foreign investors, have emerged in China to deal with the problems of the banking system. The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has played an active role in piloting some of these approaches in close cooperation with the regulator and other strategic investors. In the period 1995–2000, IFC's strategy was to work with one or two banks to help improve their governance and skills. The idea was to create some model banks which could be emulated by others and used by the regulators to introduce modern banking practices. Once the corporate governance and business practices of these banks improved, then the IFC was able to attract foreign banks to invest in these banks. These investments encouraged other foreign banks to consider taking minority stakes in the smaller banks. The success of these experiments gave confidence to the Chinese authorities to open up the big state-owned banks for foreign investment and encouraged big international banks to invest large sums of money to take minority stakes in the big banks. While progress in reform has been remarkable, the real and sustainable transformation of the Chinese banks is far from over and will be a lengthy process. Significant challenges such as improving corporate governance and credit risk management remain. Despite the significant opening of the banking system to foreign direct investment, foreign ownership in the Chinese banking system remains low by international standards. Even with existing limitations on foreign ownership, foreign strategic investors are contributing to the transformation of Chinese banks and their role remains highly relevant for the continued reform of the Chinese banking system.

This study evaluates short- and medium- term corporate governance issues impacting companies involved in ownership diversification in China. It examines problems associated with governance such as cost and framework design and makes recommendations concerning the many facets of corporate governance. The study looks at companies participating in the two main forms of ownership diversification: listed companies and small and medium enterprises whose ownership structure is dominated by insiders. The focus is on the new mechanisms and stakeholders emerging during the process of ownership diversification and their role in corporate governance. Recommended priorities for action are based on the following guiding principles: 1) Corporate governance scandals in emerging and developed markets indicate that there is no perfect corporate governance model. An effective corporate governance system should be capable of identifying weaknesses before they develop into systemic problems. 2) The inst...

China's economy has grown rapidly over the past decade. At the same time, it has undergone a fundamental change, from complete reliance on state-owned and collective enterprise to a mixed economy where private enterprise also plays a strong role. By 1998 the domestic private sector had grown to about 27 percent of gross domestic product, making it second to the state enterprise sector in economic importance. A constitutional amendment in 1999 formally recognized this shift, thereby laying the foundation for the private sector to emerge from the shadows and play a prominent role in China's future development. This study was undertaken in partnership with the State Economic and Trade Commission (SETC) and draws on fieldwork in China in the summer of 1999, along with discussions at a conference in Beijing in April 2000. It also draws on IFC's and the World Bank Group's global experience in promoting private sector development. It offers business owners, managers, and po...

This article takes an integrated approach to evaluating the interaction of initial conditions, political change, reforms and economic performance in a unified framework covering 28 transition economies in East Asia, Central and Eastern Europe, and the fsu. Initial conditions and economic policy jointly determine the large differences in economic performance among transition economies. Initial conditions dominate in explaining inflation, but economic liberalization is the most important factor determining differences in growth. Political reform emerges as the most important determinant of the speed and comprehensiveness of economic liberalization, raising the important question of what determines political liberalization. Results suggest the importance of the level of development in determining the decision to expand political freedoms.

The development story in Vietnam in recent years has been one of remarkable progress (Dollar 2002). Over the 1990s, the economy doubled and the incidence of poverty declined by half. Although these are indeed notable achievements, they are but the first steps across a difficult terrain. About 30 million people, or more than a third of the total population, continue to live in poverty, and 25 million, or about 60 percent of the labor force, are either underemployed or unemployed. To create jobs for the unemployed, underemployed, and new additions to the work force, Vietnam will have to double the economy again by the end of the decade, but this cannot happen unless both the level and the quality of investment increase substantially. According to World Bank estimates, average total investment must reach 30 percent of gross domestic product (GDP) by 2010, which represents a 5 percent increase over the 1990s, while average productivity will have to be about 40 percent higher (World Bank...

... SOEs, including state-controlled listed companies, continues to impose a severe burden on the banking system, Treasury, and stock market and is a potential threat to social stability ... Chapter 2 traces the main histori-cal developments in China's state enterprise reform from ...

China’s progress in fixing its banking system has surprised observers. Successful experiments, some of them involving foreign investors, have emerged in China to deal with the problems of the banking system. The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has played an active role in piloting some of these approaches in close cooperation with the regulator and other strategic investors. In the period 1995–2000, IFC’s strategy was to work with one or two banks to help improve their governance and skills. The idea was to create some model banks which could be emulated by others and used by the regulators to introduce modern banking practices. Once the corporate governance and business practices of these banks improved, then the IFC was able to attract foreign banks to invest in these banks. These investments encouraged other foreign banks to consider taking minority stakes in the smaller banks. The success of these experiments gave confiden...

The report argues that aid volatility is an important source of volatility for the poorest countries. Following a method already applied by the Agence Française de Développement, the report argues that loans to LICs should incorporate a floating grace period, which the country could draw upon when hit by a shock. The definition of a shock should include aid uncertainty, along with others such as commodity shocks and natural disasters. The idea is calibrated to a key IMF policy instrument towards Low-Income Countries, the Poverty-Reducing and Growth Facility (PRGF). Le rapport montre que l’aide aux pays pauvres contribue à accroître la volatilité de ces pays. Suivant une méthode déjà élaborée par l’Agence Française de Développement, l’article propose d’accorder des crédits aux pays pauvres, qui incorporent un droit de grâce flexible, utilisable par le pays, lorsqu’il est confronté à un choc négatif, quelle qu’en soit la cause : choc d’aide, de prix des matières premières ou catastrop...