Research Article

– This article is provided for Educational Purposes only – In a stratified sample of 29 joint International Monetary Fund–World Bank Financial Sector Assessment Program (FSAP) reports, the Independent Evaluation Group found that 76 percent substantially discussed state-owned financial institutions and 66 percent made recommendations. Two-thirds focused on commercial banks, 24 percent on development banks, and 28 percent on nonbank financial institutions. Upstream policy and institutional recommendations focus on sectoral regulatory frameworks (41 percent), governance (38 percent), and ownership (17 percent). Downstream enterprise-level reform recommendations focus on firm-level…

– This article is provided for Educational Purposes only – Agency view:  There is a discrepancy between the objectives of managers (the agents) and of owners (the principals). Although governments may seek to maximize social welfare, their agents may lack the incentive to maximize the use of resources toward this end. Social view:  Governments create state-owned enterprises to address market failures and improve social welfare, mixing profitability goals with social objectives. These mixed objectives create challenges for monitoring outcomes and performance. Political view:  State-owned enterprises,…

– This article is provided For Educational Purposes only – State-owned enterprises (SOEs) are an inviting channel for government responses to economic crises and natural disasters, given the degree of direct government control. The Independent Evaluation Group found such responses in the portfolio—for example, responding to the 2008 global financial crisis in part by using state-owned banks (such as the Sri Lanka Small and Medium Enterprise Development Facility, 2011) and responding to floods by restoring power distribution (Serbia Floods Emergency Recovery Project, 2015). The…