PSD Blog - The World Bank Group

Guest Post: Euro Area Sovereign Risk During the Crisis

Editor's Note: Silvia Sgherri is a Senior Economist at the International Monetary Fund, where she has contributed to recent editions of the Regional Economic Outlook for Europe. Her views do not represent those of the IMF.

While the use of public resources is critical to cushion the impact of the financial crisis on the euro-area economy, it is key that the entailed fiscal costs not be seen by markets as undermining fiscal sustainability. From this perspective, to what extent do movements in euro area sovereign spreads reflect country-specific solvency concerns? A recent IMF Working Paper suggests that euro area sovereign spreads tend to co-move over time as they are mainly driven by a common time-varying factor, mimicking global risk repricing. Since October 2008, however, there seems to be evidence of increased financial market awareness about the potential fiscal implications of national financial sectors’ frailty and future debt dynamics.

Sometimes simple really is best

Editor's Note: Alan Johnson is a Senior Private Sector Advisor in the World Bank's Investment Climate Advisory Services Group

I’m always interested in situations where tools that are aimed at developing countries are applied to their high income counterparts. A recent post in the New York Times’ small business blog provides an excellent example. The author, Scott Shane, refers to the 2008 World Bank Group Entrepreneurship Survey, which gathers internationally comparable data on business creation, and applies it to the United States.

The results of the survey show that, after accounting for differences in per capita income, countries with easier and less expensive procedures for registering new businesses have higher rates of new business creation. This conclusion is reached by examining the relationship between the number of new business registrations (entry rate density) and the “ease of starting a business” indicator in the Doing Business report.

Financial Access and “Time-Taxes” in Turkey

Editor’s Note: Murat Seker and Federica Saliola work in the World Bank's Financial and Private Sector Development Vice Presidency. This blog is a summary of the Country Note prepared for the World Bank's Enterprise Survey. The note for Turkey and several other ECA region countries can be seen at www.enterprisesurveys.org

New data from Enterprise Surveys indicate that firms in Turkey operate quite well in terms of external finance and trade. The usage and cost of finance are among the most favorable in the Eastern Europe and Central Asia (ECA) region. The average firm gets 38 percent of its investment financing from banks, which is 14 percentage points above the regional average. Moreover, the value of collateral required as a percentage of the loan amount (90 percent) is the lowest in ECA (see Figure 1). Since 2005, bank financing has become an increasingly important source of funding.

Turkey has the fifth highest percentage of firms that participate in export markets in ECA (37 percent). Exporters are larger and use foreign inputs more intensively (as a fraction of their total intermediate goods use) than non-exporters. On the other hand, firms in Turkey have a very low percentage of foreign ownership−close to one-third of the regional average.

New Blogger: Filip Drapak

Public Private Partnership—so often the center of attention and so often misunderstood. Is it a method of public procurement of infrastructure or a tool to mobilize private finance for public infrastructure? Is it capable of transferring risks to the private sector or taking advantage of advanced performance management? And does it deliver value for money to taxpayers or “juicy” deals to rent seeking private companies—these are some of the questions we shall ask in this blog. We'll also look at what is going on in the market, how the financial crisis has affected PPPs, and what the most recent developments are in this field around the globe.

I've invited Filip Drapak, former Chairman of the Czech Republic PPP Centrum, to comment on these issues. Filip joined the World Bank Institute in 2007 to work as a Senior Specialist in the Public-Private Partnerships in Infrastructure practice.

Filip brings over 14 years of experience in finance, economics and banking. For the past 5 years, he has focused almost exclusively on public private partnerships, developing government policies and legislation, setting up institutional support for PPP and supporting the management of pilot projects. Welcome!

The smart economics of educated women

Editor's Note: Jennifer Yip is a consultant for the World Bank Group's Doing Business team.

At an age when mothers admonish their children to finish their brussels sprouts, my mother issued warnings about the importance of getting a PhD if I wanted to gain the respect of my future husband. Those warnings were followed by the oft-repeated reminder that I should "marry well, so you don’t have to work if you don’t want to."

Twenty years and a couple of degrees later I’ve often wondered how those two pieces of advice go together. What is the point of getting an advanced degree if I eventually decide not to work? 

New Blogger: Janine Firpo

Mobile banking – everyone is talking about it, but how can we separate hype from reality? I've invited Janine Firpo, President of Sevak Solutions, to help us make sense of this potentially transformative technology. Janine was recently hired by IFC, a member of the World Bank Group, to work with IFC’s regional advisory teams to accelerate the development and large-scale roll-out of mobile money solutions in East Asia and the Pacific.

Janine brings over 24 years experience in technology, international development, and consortium building to her efforts. For the past six years, she has focused exclusively on the role of information and communications technologies in the extension of financial services. She is a pioneer in the implementation of branchless banking solutions and has worked on a range of related issues in Africa, Asia, and Latin America. Welcome!

New Blogger: CGAP Team

While Wall Street may be in chaos, the world of finance is not all centered on New York. Around the world, microfinance has been growing by leaps and bounds, aided by innovations in technology and new varieties of microfinance institutions. That's why I'm pleased to introduce the CGAP Team as a guest contributor on the PSD blog. CGAP - the Consultative Group to Assist the Poor - is "the leading independent resource for objective information, expert opinion, and innovative solutions for microfinance." The CGAP team recently started their own blog, and we'll be cross-posting some of their expert insights here at the PSD blog. Welcome CGAP! 

New Blogger: Penelope Brook

If you hadn't heard, Doing Business 2009 is out. And now we can get some extra insight into the countries that have been reforming. Penelope Brook, Director of the Indicators Analysis Department, is visiting some of the top reformer countries in Eastern Europe and Central Asia, and she'll be sending back dispatches during her trip. As Penelope's bio explains, she "has focused on private sector development and infrastructure sector reform, with a particular emphasis on the pro-poor aspects of reform processes and sector policies." Welcome Penelope!

New Blogger: Carmen Niethammer

Today the PSD Blog is welcoming a new blogger to the team - Carmen Niethammer. Carmen is a Program Officer in IFC's gender team and IFC focal point for the World Bank Group's Gender Action Plan. She is based in Washington, D.C. and currently task-manages a project on 'Gender and Corporate Social Responsibility Reporting' as well as on 'Gender and Export Promotion.' Carmen is also a fellow graduate of the Johns Hopkins School of Advanced International Studies. It has been a while since the PSD blog has gotten any contributions on the topic of gender, so her addition to the blog is timely. Welcome, Carmen!

New blogger: Colleen Mascenik

I'd like to welcome Colleen as a new guest blogger here on the PSD Blog. She is a learning analyst at the Bank working on financial and private sector development. Colleen just finished participating in the Partnership Forum on Making Finance Work for Africa, held in Ghana earlier this week. She'll be reporting on the conference proceedings, where she met a mix of some 300 central bankers, donors, financiers, and other contributors to the marketplace of ideas. You'll also find out essential need-to-know information, like just how badly you're being ripped off by the ATM in the IFC building. Welcome!