Bruno Biais, Jean-Charles Rochet, Paul Woolley 21 August 2014
The Global Crisis has intensified debates over the merits of financial innovation and the optimal size of the financial sector. This column presents a model in which the growth of finance is driven by the development of a financial innovation. The model can help explain the securitised mortgage debacle that triggered the latest crisis, the tech bubble in the late 1990s, and junk bonds in the 1980s. A striking implication of the model is that regulation should be toughest when finance seems most robust and when innovations are waxing strongly.
One of the curiosities of the modern economy is why the finance sector is so large. Economists have only recently sought to document and ponder this phenomenon. Empirically, Greenwood and Scharfstein (2013) find that, in the US, financial services, which accounted for 2.8% of GDP in 1950, made up 8.3% of GDP in 2006.
securitisation, financial crises, moral hazard, asymmetric information, financial innovation, global crisis, bubbles, monitoring, shirking, junk bonds, CDOs, CDSs, ETFs
Imran Rasul, Daniel Rogger 19 November 2013
Around the world, civil service reform is viewed as necessary to deliver public services effectively and to foster development. However, evidence is thin on how the management of bureaucrats affects the provision of public services. This column presents new evidence from Nigeria linking completion rates of government projects to bureaucractic management practices. Greater autonomy is associated with higher completion rates, whereas performance monitoring and incentive schemes seem to backfire. The most effective private-sector management practices may not be suited to public sector bureaucracies.
Since its inception in the 1850s, the British Civil Service has become a cornerstone of the executive branch of the UK government, translating the policy programme of the government into practice. Its practices have evolved gradually over the decades, but it is now in the midst of a major upheaval – in 2012, the Minister for the Cabinet Office and the Head of the Civil Service jointly published the Civil Service Reform Plan. The plan recognised the increased expectations on government to deliver public services in the context of perhaps permanently diminished government resources.
Development Institutions and economics Politics and economics
Africa, Management, incentives, Nigeria, bureaucracy, civil service, monitoring