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Low cost financing in establishing economical development is very important. At this point, financial intermediaries provide great contributions to economic development by eliminating asymetrical information problem between lender and borrower. It is possible to see capital market in anglo‐saxon countries and banking system in Europe and Japan mostly from historical dimension. However, long term financing is done through capital market in most developed countries at present. It is a common characteristic in countries such as Turkey, Chile and Mexico whose economies are financed by banking system. Singh and Weisse (1998), suggests that it is because of late industrialisation 1. Developing countries are generally those where there is less capital. Therefore attracting both internal and external savings into the banking system (for these countries) is very important from economical development point. At this point, powerful banks are preferred by the investors. Because the possibilty of failure is low (for these banks) 2. The most important factor that effects banks risk structure is public’s role. Because public can effect banks risk structure both at macro and micro level. Public’s influence on bank’s risk structure at macro economic level is due to general economical structure. If the general economic structure has high volatility and is away from consistency, this situation will increase the risk for banking sector. On the other hand, fiscal dominance is one of the main problems especially in developing countries. Fiscal dominance caused by lack of enough public revenue affects banking sector negatively. Thus, a goverment which can not prepare the macro economic environment where banks can function at high productivity will increase banks’ risks. In addition, banks require strict regulations and controlling as its structure is open to fraud. That these regulations are ignored or not prepared will lead to risk accumulation in the sector. It becomes a social responsibility of the state to take necessary cautions as these kinds of issues change a large cost on the society. Within this framework, the aim of our study is to examine public’s role on fragilities in banking sector. These examinations will be conducted for Turkey which experienced a collapse in banking sector in the recent period. In the first and second part of our study, public’s influence on the sector at macro and micro level will be examined. Experiences gained through Turkey example will be presented in the conclusion.

The purpose of this paper is to identify the determinants for currency internationalization and forecast the potential of RMB as an international reserve currency.

This paper performs linear or non-linear regressions of the shares of eight major international reserve currencies as the reserve assets in global central banks on the macro economic and financial variables of their corresponding countries to identify the determinants for their international positions, and conducts an “counter-factual simulation” for the potential of RMB as an international reserve currency.

This paper finds that the economic size and the “network externalities” are the most important determinants for the international status of a reserve currency; that exchange rate volatility has negative impacts; the conditions for the RMB internationalization are basically available. The simulation for the potential of RMB as an international reserve currency reveals that the international role of RMB could surpass that of the Japanese Yen and the British Pound, and get close to Euro in the coming 15 years. Based on the empirical evidence, this paper suggests a promoting strategy for RMB internationalization.

This paper has not taken the influence of economic systemic and political factors on the process of RMB internationalization into account.

RMB internationalization promotion should follow the strategy of “stably create RMB international demand in the initial period and dramatically release the RMB overseas supply in the latter period” in the coming 15 years.

The conclusions and policy implications are from the results of the empirical analysis on the 45-year historical experience on the eight main international currencies.

This article combines two sources of data to shed light on the nature of transactional legal work. The first consists of stories about contracts that circulate among elite transactional lawyers. The stories portray lawyers as ineffective market actors who are uninterested in designing superior contracts, who follow rather than lead industry standards, and who depend on governments and other outside actors to spur innovation and correct mistakes. We juxtapose these stories against a dataset of sovereign bond contracts produced by these same lawyers. While the stories suggest that lawyers do not compete or design innovative contracts, their contracts suggest the contrary. The contracts, in fact, are consistent with a market narrative in which lawyers engage in substantial innovation despite constraints inherent in sovereign debt legal work. Why would lawyers favor stories that paint them in a negative light and deny them a potent role as market actors? We conclude with some conjectures as to why this might be so.

This paper aims to survey India's experience with exporting services. The authors seek to show that the country's experience is unique in that modern tradable services are a significantly larger share of GDP than in other countries at comparable levels of economic development. This has not always been the case, however; India's out‐performance is limited to recent years. Policy initiatives, from trade reform to liberalization of domestic industrial and service sectors, were important for jump‐starting the process.

This paper reviews the literature and evidence. It takes a close look at the Indian service sector and specifically information‐technology‐related (IT) services, seeking to situate the growth in service exports from India in its comparative context. The authors document the role that exports of services have played in the performance of the Indian economy in recent years. They seek to pinpoint the “take‐off” in Indian services output and establish the extent to which the country's success in exporting services is exceptional from an international point of view. And they discuss the extent to which India's performance as an exporter of services has been shaped by policies liberalizing the service sector itself and by liberalization of the manufacturing sector.

Panel and country‐specific regressions for a cross section of countries point to the importance of a range of additional factors: overall economic development, communications infrastructure, access to foreign technology, and spillovers between the merchandise and service exports. Importantly, however, these factors, jointly or individually, do not wipe out the significance of a dummy variable for India. India, evidently, is a significant outlier as an exporter of services, and even more so as the period proceeds.

The paper discusses the country's major policy initiatives, such as trade reforms and liberalization of domestic industrial and service sectors, and their importance for jump‐starting the process of services growth and its exports. Regression results show that, in addition to these policies, other factors such as overall economic development, communications infrastructure, access to foreign technology, and spillovers between the merchandise and service exports were important as well.

The 1896 presidential election between William Jennings Bryan and William McKinley has new salience in the wake of the 2016 presidential contest. We provide the first systematic analysis of presidential voting in 1896, combining county-level returns with economic, financial, and demographic data. We show that Bryan did well where interest rates were high, railroad penetration was low, and crop prices had declined. We show that further declines in crop prices or increases in interest rates would have been enough to tip the Electoral College in Bryan’s favor. But to change the outcome, the additional changes would have had to be large.

It is generally believed that the Smoot–Hawley Tariff Act (SHTA) of 1930 was an electoral response on the part of the Republican Party to Midwestern farmers’ concerns in the 1928 general election which via the legislative process (pork-barreling and log-rolling) was transformed into a generalized upwards tariff revision. There are, however, problems with this view, not the least of which is the fact that the farmers themselves were well aware of the fact that higher tariffs would not improve their lot, and hence favored the price support/equalization measures found in the Haugen–McNary Farm Relief Bill. This paper presents an alternative explanation. Specifically, it is argued that the SHTA had its origins in manufacturing states where the demand for a comprehensive upward revision of tariffs was transformed via the electoral process – and not the legislative process – into an omnibus upward tariff revision that included agriculture. The omnibus nature of the bill, it is argued, was intended as both (i) an electoral strategy and (ii) a hedge against near-certain revolt in rural America over anticipated higher prices for manufactures. We show that while successful electorally (i.e., in the 1928 presidential election), the Smoot–Hawley Tariff Bill fell apart in the legislature in the summer of 1929 when 13 Insurgent Republicans broke with the party to vote with the Democrats to lower tariffs on manufactures.

Recent research in mainstream economics, before as well as since the 2008 crisis, has stressed the importance of growing current account imbalances among countries, particularly the imbalances between the United States and some Asian countries. While some have seen in these imbalances proof of the efficient work done by liberalized financial markets, as well as a sign of the great dynamism of the US economy, others have warned about the possible threats to the global economic stability arising from potential speculation against the dollar. These latter writers see the international imbalances as a contemporary version of the Triffin Dilemma. In this paper, we argue that both views are mistaken because they both focus on net capital flows. Recent research suggests, on the contrary, the importance of international gross capital flows related to financial liberalization. However, our argument goes further in order to demonstrate that the analysis of the consequences of international gross capital flows were already at the core of the Triffin dilemma, as well as in wider debates about the inherent instability of the international monetary power of individual countries, before and after World War II.

The experience of the 1990s renewed economists’ interest in the role of credit in macroeconomic fluctuations. The locus classicus of the credit-boom view of economic cycles is the expansion of the 1920s and the Great Depression. In this paper we ask how well quantitative measures of the credit boom phenomenon can explain the uneven expansion of the 1920s and the slump of the 1930s. We complement this macroeconomic analysis with three sectoral studies that shed further light on the explanatory power of the credit boom interpretation: the property market, consumer durables industries, and high-tech sectors. We conclude that the credit boom view provides a useful perspective on both the boom of the 1920s and the subsequent slump. In particular, it directs attention to the role played by the structure of the financial sector and the interaction of finance and innovation. The credit boom and its ultimate impact were especially pronounced where the organization and history of the financial sector led intermediaries to compete aggressively in providing credit. And the impact on financial markets and the economy was particularly evident in countries that saw the development of new network technologies with commercial potential that in practice took considerable time to be realized. In addition, the structure and management of the monetary regime mattered importantly. The procyclical character of the foreign exchange component of global international reserves and the failure of domestic monetary authorities to use stable policy rules to guide the more discretionary approach to monetary management that replaced the more rigid rules-based gold standard of the earlier era are key for explaining the developments in credit markets that helped to set the stage for the Great Depression.

The focus of this paper is the economic theory of the plans for the European Monetary Union. Part 1 demonstrates that economists, bankers and policy makers know very little about monetary policy. Part 2 explains the errors of the common practice of defining money by its functions. Because any monetary policy must rest on a definition of money it seems reasonable to conclude that a flawed definition might lead to problems with monetary policy. Part 3 applies this insight to the plans for a common currency in Europe. Because of uncertainties about the timing and details of the implementation, some important considerations are necessarily speculative. They are relegated to appendices. Appendix 1 comments on the timing and authorship and responsibility for the official reports with their unspecified authors. Appendix 2 supplies some grounds for doubting the ultimate durability of the European Monetary Union focusing on reasons that are historical, economic and pragmatic. Because the entire movement is driven by politics, not economics, Appendix 3 considers some of the relevant political issues. The conclusions summarize and speculate on possible reasons for successful outcomes.