Modernization of regulation and supervision of LDC financial institutions : final report

The success of this reform movement is jeopardized, however, by insufficient financial regulatory and supervision systems. This report examines the current status of such systems in developing countries and presents guidelines for strengthening them through prudential regulation and supervision. The following specific needs are identified: creation of an effective legislative and regulatory framework for financial supervision; specific legislation for dealing with problem institutions; accounting standards and forms for consolidated prudent reporting; off-site supervisory examination programs, including computerized systems for analyzing bank reports; strengthened roles for external auditors; supervisory staff training; and the establishment of credit risk bureaus. Sources of international technical assistance and training, including A.I.D."s Financial Sector Development Project, are also identified.