Using Development-Oriented Equity Investment as a Tool for Restructuring Transition Banking Sectors

Meigas, Helo

World Bank, Washington, DC

关键词: ACCOUNTING;    AUDITING;    AUDITORS;    AUDITS;    BALANCE SHEET;   

DOI  :  10.1596/1813-9450-2723
RP-ID  :  WPS2723

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Over the past 10 years the three Balticrepublics have undertaken significant restructuring of theirbanking sectors, supported by the World Bank through threeprojects: the Financial Institutions Development Project inEstonia, the Enterprise and Financial Sector RestructuringProject in Latvia, and the Enterprise and Financial SectorProject in Lithuania. These projects included a credit line,channeled through local commercial banks, to providelong-term funding and complementary technical assistance toprivate enterprises. In parallel, the government of Swedeninjected equity into the commercial banks from SwedfundFinancial Markets (SFM). The projects and the accompanyingSwedfund equity were aimed at promoting sound bankingsystems in the three Baltic countries-by strengthening theequity in the banks and thereby expanding medium- andlong-term financing. Meigas examines the role of SFM-whichprovides development-oriented equity investment (DEI) toBaltic banks-in the context of the World Bank programs. Sheexamines the arguments for deploying DEI as a developmentvehicle by gauging its impact in the three Baltic countrieson banking skills and services, on capitalization, and onshareholder structure and board membership. She draws outthe role of technical assistance and compares its impactwith that of DEI, and explores the possibilities offered byDEI for imposing sound corporate governance. The author alsodescribes the necessary ingredients for successful DEI. Theauthor's analysis shows that the Baltic projects werevaluable initiatives that could in principle be replicatedin other transition or developing economies whose bankingsector faces serious restructuring challenges. Adevelopment-oriented equity investment, like that made bySFM, can address the important deficiencies in a bankingsector that is still in a rudimentary state, lacking bothcapital and banking skills. SFM's most effective toolwas the imposition of sound corporate governance on theinstitutions that received the equity injection. Thisapproach provided a powerful supplement to the bankingsupervisory functions. Rather than relying on the externalenforcement power of state supervision, SFM targetedinternal processes to change business practices. As aresult, the DEI led to improvements in the corporate cultureand broader risk management and thus in the quality ofbanking services-not only meeting the institutionaldevelopment objectives but also ensuring an adequate returnon the invested capital. The potential of good corporategovernance for easing the work of banking supervisors hasbeen stressed by the Basle Committee on Banking Supervision.This potential is particularly valuable in countries stilldeveloping the supervisory function, and DEI, the authorargues, is well suited for the task of improving corporate governance.