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"Caprio and Honohan question the widespread belief that market discipline on banks cannot be effective in less developed financial environments. There is no systematic tendency for low-income countries to lack the prerequisites for market discipline. Offsetting factors to the weaker market and formal information infrastructures are (1 the less complex character of banking business in low-income countries;(2) the growing internationalization of these markets through the presence of foreign banks, and through international trading of the debt and equity of locally-controlled nongovernment banks (3) the smaller size of the business and financial community. However, continuing dominance by public sector banks in some countries limits the likely development of market monitoring, which is clearly a cause for concern, given the disappointing record of governments around the World as monit

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