address policy trade-offs in their strategies more often (significantly positive coefficient on _foreignbank0509_ in the _systemic risk_ regression and on _foreignasset0509_ in the _trade-off_ regression _)._ Interestingly, the share of state ownership dropped out of the factors that in any way significantly affect the attributes of strategies.

_Experience of banking crises_ . The experience of past banking crises is significantly associated with more comprehensive financial sector _strategies_ (positive coefficient on _w_crisis_ in the _strategy_ column) _,_ in particular as related to implementation plans and potentially to the overall comprehensiveness of the strategy (significantly positive coefficient on _w_crisis_ in the _implementation_ regression). However, the positive association holds only if the crises are more recent. Because if the banking crises occurred in the more distant past, the fading memory of those events and the ensuing complacency could be associated with much less comprehensive strategies, especially in regard to _implementation_ and to a lesser extent to policy _trade-offs_ (significantly negative coefficients on _crisis_ in _strategy_ and _implementation_ regressions).

_Development assistance in formulation of financial sector strategies_ . In some cases, countries request and receive development assistance on formulating their financial sector strategies. However, it is very difficult to collect consistent data on such development assistance across all agencies that could have provided it. That said, we have strived to include at least some of the data, namely, that on the development assistance provided by the World Bank under the FIRST initiative. Most of the development assistance has been concentrated in Africa and South Asia.<sup>12</sup> When including the 0/1 dummy (not received/received relevant development assistance) in our regressions, we fail to find any significant positive effect of this assistance on the scope and quality of financial sector strategies in addition to the considered country characteristics. This is surprising because such development efforts address, at the minimum, strategic objectives on financial development, and the regression should pick up those efforts. More comprehensive data and further research are needed to derive more affirmative conclusions in this regard.

In sum, the scope and characteristics of national strategies for the financial sector are significantly influenced by the type of legal system in a given country, its level of income and macroeconomic stability, existing financial depth and inclusion, the share of foreign ownership in the national financial sector, and the experience of past financial crises. Let us reiterate the most significant results at the 5 percent level. Specifically, if a country’s legal system is based on mixed law or on civil, common, or mixed law, it pays more attention to financial development objectives and implementation, respectively, in its strategies. Moreover, countries with legal systems based on civil law and religious law do a better job in addressing trade-offs between financial development and stability. As their per capita income increases, countries pay less attention to development objectives but, surprisingly, to systemic risk as well. Also, overall effectiveness of public governance can help countries address policy trade-offs in the financial sector.

> 12 A total of 20 countries have inquired funds from the FIRST initiative to develop their financial sector strategies. 17 of the countries are from Africa of which 7 are in our sample. Hence, those 7 African countries have the value of 1 as the entry in the dummy variable. The remaining 3 countries are from South Asia (Maldives, Nepal, and Bhutan). They are in the sample, however, they have not finished the update of their strategies yet or they are in the process of acquiring the assistance. Hence, they have 0 as the entry in the dummy variable.

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