Contents -- Acknowledgments -- Foreword -- Preface -- Executive Summary -- Acronyms and Abbreviations -- 1 Introduction -- Background -- Objectives of the Review -- Caveats on the Scope of Review -- Inputs -- Organization of the Review -- 2 What Constitutes Good Practice? -- Historical Perspective -- Literature Review -- Bank Guidelines and Strategies -- Past IEG Recommendations and Management Response -- Framework for Evaluation -- PART I ASSESSING BANK ASSISTANCE -- 3 Trends in Lending and Nonlending -- Overview -- Bank Lending for Financial Sector Reforms -- Focus of Financial Sector Reforms -- Bank Nonlending Assistance for Financial Sector Reforms -- 4 Regional Patterns of Bank Assistance -- Europe and Central Asia (ECA) Region Was the Most Active -- Africa (AFR) and Latin America and the Caribbean (LAC) Regions Were Early Reformers -- East Asia and Pacific (EAP) Region Was Mostly Crisis Driven -- Middle East and North Africa (MNA) and South Asia (SAR) Regions Took Conservative Approaches -- 5 Quality-at-Entry of Bank Assistance -- Overview -- Quality-at-Entry in Lending -- Quality of Nonlending Services -- Consistency of Bank Approaches within Countries -- Coherence of Bank Approaches across Countries -- 6 Outcomes of Bank Loans and Credits -- Overview -- Financial Sector versus Multisector Loans -- Trends and Sequencing of Adjustment Loans -- 7 Bank Support to Crisis Countries -- Overview -- Did the Bank Anticipate the Crisis? -- Bank Response to Crises -- Objectives and Designing Loans -- Below-Average Achievement -- Collaboration with the IMF -- Effectiveness and Sustainability of the Bank's Crisis Unit -- Bank Leadership during Crisis -- Recommendations -- PART II ANALYZING RESULTS AT THE COUNTRY LEVEL -- 8 Country-Level Outputs:Ownership -- Overview -- Shift to Private Ownership -- Considerable Progress Has Been Made.

Privatization Far from Complete in Many Countries -- Quality Matters -- Better Outcomes with Prior Financial Restructuring -- Other Forms of Bank Restructuring -- Avoiding Buildup of NPLs -- Closure as an Alternative to Bank Privatization -- Privatization Took Longer Than Expected -- Unanticipated Problems -- Restructuring without Privatization Is Seldom Successful -- Recommendations on Restructuring and Privatizing Banks -- 9 Country-Level Outputs: Incentives -- Overview -- Changes in the Regulatory Regime Present a Mixed Picture -- Regulatory Framework in ECA Region Transition Countries -- Implementing Regulations and Better Banking Supervision -- Special Topic: Legal Immunity for Supervisors -- Special Topic: Deposit Insurance -- Recommendations on Improving the Incentive Framework -- 10 Country-Level Outcomes: Market Structure, Contestability, Efficiency, and Health -- Overview -- Changes in Market Structure: Bank Concentration -- Changes in Contestability -- Interest Rate Spread -- Health of the Financial System -- 11 Country-Level Impact: Financial Sector Depth and Stability -- Overview -- Financial Sector Depth: Positive Findings -- Systems Still Shallow in Many Countries -- Credit to the Private Sector -- Financial Sector Depth: Capital Markets -- Did Bank Borrowing Improve Stability? -- 12 Findings and Recommendations -- Findings -- Recommendations -- Appendixes -- A: Data on Trends in Lending and Nonlending -- B: Outcome Ratings of Bank Loans -- C: Country-Level Outputs -- D: Reference Tables -- E: Country-Level Outcomes -- F: Definitions and Sources for IEG/DEC Model -- G: Management Response -- H: Chairman's Summary, Committee on Development Effectiveness (CODE) -- Endnotes -- References -- Boxes -- 3.1 Identifying Bank Assistance for the Financial Sector -- 3.2 Financial Sector Assessment Program (FSAP).

4.1 Financial Sector Reforms in the ECA Region: Bank Strategy, Analysis, and Lending -- 4.2 Bank Assistance to China -- 4.3 Pakistan and Bangladesh: Commitments Explain Differences in Bank Lending -- 5.1 Highly Relevant Objectives for Financial Sector Reforms -- 5.2 Strong Consistency among Bank Products -- 6.1 What a Difference a (Near) Crisis (Sometimes) Makes -- 7.1 Objectives of Crisis Lending: Ambitious Reforms -- 7.2 Mixed Outcomes -- 7.3 Improved Coordination Needed between the World Bank and the IMF -- 8.1 Problems Comparing Results among Countries -- 8.2 Data on Bank Ownership Can Be Misleading -- 8.3 Quality of the Buyer Matters -- 8.4 Absence of Prior Financial Restructuring Does Not Work Well -- 8.5 Empowerment of Asset Management Companies -- 8.6 Liquidations Have Been Difficult -- 8.7 Restructuring Banks without a Commitment to Change Ownership -- 9.1 Lack of Political Support: Algeria -- 10.1 IEG/DEC Model on Constructing a "Counterfactual" -- 10.2 Financial Reforms Can Affect Banking Health in Both Directions: Tunisia -- Figures -- 2.1 Evaluation Framework -- 3.1 Bank Finance Loans as a Percentage of Total Bank Commitments, FY93-FY03 -- 3.2 Bank Loans with Financial Sector Reforms, by Number of Loans, FY93-FY03 -- 3.3 Types of Reforms as a Percentage of Bank Projects with Financial Sector Components -- 3.4 Investment Loans Supporting Financial Sector Reforms, by Year -- 3.5 ESW Reports Containing Financial Sector Analysis, by Count, FY93-FY03 -- 6.1 Outcomes of Adjustment and TA Loans, FY93-FY03 -- 6.2 Outcomes by Sector and Classification, by Number of Loans, FY93-FY03 -- 6.3 Outcomes by Sector and CPIA Ratings, by Number of Loans, FY93-FY03 -- 6.4 Outcomes by Country Characteristics, FY93-FY03 -- 6.5 Outcomes of Adjustment Loans, with and without Technical Assistance.

7.1 Outcomes of Adjustment Loans, Crisis versus Noncrisis Lending -- 8.1 Changes in Government Ownership of Banks -- 10.1 Bank Concentrations in Countries That Borrowed for Financial Reforms, 1993-2001 -- 10.2 Changes in Foreign Ownership -- 10.3 Median Interest Rate Spreads in Countries That Borrowed, 1992-2002 -- 11.1 Financial Sector Depth and Liquidity Preference in Countries That Borrowed for Financial Reforms, 1992-2002 -- 11.2 Credit to the Private Sector in Countries That Borrowed for Financial Reforms, 1992-2002 -- 11.3 Market Capitalization and Value of Stocks Traded in Countries, 1992-2002 -- Tables -- 3.1 Lending for Financial Sector Reforms, FY93-FY03 -- 3.2 Investment Lending with Financial Sector Components, by Category, FY93-FY03 -- 4.1 Lending Categorized as Finance, Percent of Total, FY93-FY03 -- 4.2 Lending with Financial Sector Components, FY93-FY03 -- 4.3 Regional Concentration of Reforms -- 5.1 QAG Assessment of ESW Quality, FY98-FY02 -- 5.2 Bank Loans Supporting Deposit Insurance, by Fiscal Year -- 6.1 Outcomes of Financial Sector Lending and Components, FY93-FY03 -- 6.2 Outcomes of Adjustment Loans, by Period and Sequence -- 7.1 International Rescue Efforts and Bank Responses -- 7.2 Crisis Loans with Financial Sector Components -- 7.3 Postcrisis Adjustment Operations with Financial Sector Components -- 8.1 Changes in Government Ownership, with and without TA -- 8.2 Changes in Bank Ownership -- 9.1 Capital Adequacy and Loan Classification, Changes between 1998 and 2003 -- 9.2 Indicators on Strength of Financial Regulations in Transition Countries -- 10.1 Annual Growth Rates in Banking Sector Concentrations -- 10.2 Changes in Contestability -- 10.3 Annual Growth Rates in Interest Rate Spreads -- 10.4 Measures of Banking Health in Borrowing versus Nonborrowing Countries.

11.1 Annual Growth Rates in Financial Sector Depth and Confidence in the Banking System -- 11.2 Distribution of Changes in Measures of Financial Sector Depth in Borrowing Countries -- 11.3 Annual Growth Rates for Credit to the Private Sector -- 11.4 Distribution of Changes in Access to Credit in Borrowing Countries -- 11.5 Distribution of Changes in Capital Market Measures -- 11.6 Number of Countries with and without Systemic Insolvency.