Banks' liquidity holdings are comfortably above legal or prudential requirements in most Central American countries. While good for financial stability, high systemic liquidity may nonetheless hinder monetary policy transmission and financial markets development. Using a panel of about 100 commercial banks from the region, we find that the demand for precautionary liquidity buffers is associated with measures of bank size, profitability, capitalization, and financial development. Deposit dollarization is also associated with higher liquidity, reinforcing the monetary policy and market development challenges in highly dollarized economies. Improvements in supervision and measures to promote dedollarization, including developing local currency capital markets, would help enhance financial systems' efficiency and promote intermediation in the region.

No abstract

This paper tests the dynamic implications of cumulative causation and network theory on the self-sustaining nature of the migration process. A sequential migration model is derived and estimated with a panel of Mexican household heads for the years 1980± 89. Consistently with cumulative causation and network theory, the empirical results show that, after controlling for unobserved heterogeneity, previous migration experience and migration-related variables are the strongest predictors of current migration decisions. This persistence in migration patterns implies that immigration policies inducing small changes in expected costs and benefits of US work fail to prevent entry into, or encourage exit from, the US labor market by experienced migrants. However, large temporary disruptions such as the 1994 Mexican peso devaluation may permanently increase migratory flows by inducing new migrants to enter the US labor market. LABOUR 15 (3) 457± 486 (2001) JEL F22, J61 # 2001 CEIS, Fondazione Giacomo Brodolini and

Using a broad set of macroeconomic country characteristics to supplement a new and comprehensive micro-level dataset for 140 countries, we identify structural factors, policies, and individual characteristics that are associated with financial inclusion-in general, and for women in particular. We find that structural country characteristics, such as resourcerichness and level of development, and policies, such as stronger institutions, and financial development are significantly related to financial inclusion. We find a robust negative relationship between being female and financial inclusion as in previous studies, and our analysis points to legal discrimination, lack of protection from harassment, including at the work place, and more diffuse gender norms as possible explanatory factors.

This Working Paper should not be reported as representing the views of the IMF.