Ang, James (2009): Financial Liberalization Or Repression?
Download (229kB) | Preview
While financial liberalization has always been advocated in developing countries, experiences with it do not always produce desirable outcomes. In order to evaluate the costs and benefits associated with financial liberalization and repression, this study highlights that the overall effectiveness of the reform programs depends on the relative strength of each financial sector policy implemented. Using India as a case study, the results indicate that interest rate controls, statutory liquidity requirements and directed credit programs positively affect the level of financial development. A rise in cash reserve requirements appears to have an adverse effect on development of the financial system. The results lend some support to the argument that some form of financial restraints may help promote financial development.
|Item Type:||MPRA Paper|
|Original Title:||Financial Liberalization Or Repression?|
|Keywords:||Financial development; financial liberalization|
|Subjects:||E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies
O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy
|Depositing User:||James Ang|
|Date Deposited:||06. Apr 2009 09:10|
|Last Modified:||12. Feb 2013 00:42|
Ang, J.B. (2008a). "Are Financial Sector Policies Effective in Deepening the Malaysian Financial System?" Contemporary Economic Policy 62, pp. 623-635.
____ (2008b). "A Survey of Recent Developments in the Literature of Finance and Growth." Journal of Economic Surveys 22, pp. 536-576.
____ (2009a). "Finance and Inequality: The Case of India." Southern Economic Journal, forthcoming.
____ (2009b). "Private Investment and Financial Sector Policies in India and Malaysia." World Development, forthcoming.
Ang, J.B. and McKibbin, W.J. (2007). "Financial Liberalization, Financial Sector Development and Growth: Evidence from Malaysia." Journal of Development Economics 84, pp. 215-233.
Bencivenga, V.R. and Smith, B.D. (1992). "Deficits, Inflation, And The Banking System In Developing Countries: The Optimal Degree Of Financial Repression." Oxford Economic Papers 44, pp. 767-790.
Bewley, R. (1979). "The Direct Estimation of the Equilibrium Response in a Linear Dynamic Model." Economics Letters 3, pp. 357-361.
Bewley, R.; Orden, D.; Yang, M. and Fisher, L.A. (1994). "Comparison of Box-Tiao and Johansen Canonical Estimators of Cointegrating Vectors in VEC(1) Models." Journal of Econometrics 1-2.
Caporale, G.M. and Pittis, N. (2004). "Estimator Choice and Fisher's Paradox: A Monte Carlo Study." Econometric Reviews 23, pp. 25-52.
Chiappori, P.-A.; Perez-Castrillo, D. and Verdier, T. (1995). "Spatial Competition in the Banking System: Localization, Cross Subsidies and the Regulation of Deposit Rates." European Economic Review 39, pp. 889-918.
Clarke, G.; Xu, L.C. and Zou, H.-f. (2006). "Finance and Income Inequality: What Do the Data Tell Us?" Southern Economic Journal 72, pp. 578-596.
Courakis, A.S. (1984). "Constraints on Bank Choices and Financial Repression in Less Developed Countries." Oxford Bulletin of Economics and Statistics 46, pp. 341-370.
Demirguc-Kunt, A. and Detragiache, E. (1998). "The Determinants of Banking Crises in Developing and Developed Countries." International Monetary Fund Staff Papers 45, pp. 81-109.
Emran, S.; Shilpi, F. and Alam, I. (2007). "Economic Liberalization and the Price Response of Aggregate Private Investment: Time Series Evidence from India." Canadian Journal of Economics 40, pp. 914-934.
Emran, S. and Stiglitz, J. (2009). "Financial Liberalization, Financial Restraint, and Entrepreneurial Development." (Available at SSRN: http://ssrn.com/abstract=1332399).
Gennotte, G. and Pyle, D. (1991). "Capital Controls and Bank Risk." Journal of Banking and Finance 15, pp. 805-824.
Giorgio, G.D. (1999). "Financial Development and Reserve Requirements." Journal of Banking and Finance 23, pp. 1031-1041.
Gurley, J.G. and Shaw, E.S. (1955). "Financial Aspects of Economic Development." American Economic Review 45, pp. 515-538.
Hellmann, T.F.; Murdock, K.C. and Stiglitz, J.E. (1996). "Deposit Mobilisation Through Financial Restraint," Hermes, N. and Lensink, R. (Ed), In: Financial Development and Economic Growth: Theory and Experiences from Developing Countries. London: Routledge, 219-246.
____ (2000). "Liberalization, Moral Hazard in Banking, and Prudential Regulation: Are Capital Requirements Enough?" American Economic Review 90, pp. 147-165.
Inder, B. (1993). "Estimating Long-Run Relationships in Economics: A Comparison of Different Approaches." Journal of Econometrics 57, pp. 53-68.
Johansen, S. (1988). "Statistical Analysis of Cointegration Vectors." Journal of Economic Dynamics and Control 12, pp. 231-254.
Kaminsky, G.L. and Reinhart, C.M. (1999). "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems." American Economic Review 89, pp. 473-500.
Kim, D. and Santomero, A.M. (1988). "Risk in Banking and Capital Regulation." Journal of Finance 43, pp. 1219-1233.
King, R.G. and Levine, R. (1993). "Finance and Growth: Schumpeter Might Be Right." Quarterly Journal of Economics 108, pp. 717-737.
Levine, R. (2005). "Finance and Growth: Theory and Evidence," Aghion, P. and Durlauf, S. (Ed), In: Handbook of Economic Growth. Netherlands: Elsevier Science, 865-934.
Levine, R.; Loayza, N. and Beck, T. (2000). "Financial Intermediation and Growth: Causality and Causes." Journal of Monetary Economics 46, pp. 31-77.
MacKinnon, J.G.; Haug, A.A. and Michelis, L. (1999). "Numerical Distribution Functions of Likelihood Ratio Tests For Cointegration." Journal of Applied Econometrics 14, pp. 563-577.
Mavrotas, G. and Son, S.-I. (2006). "Financial Sector Development and Growth: Re-examining the Nexus," Bagella, M., Becchetti, L. and Hasan, I. (Ed), In: Transparency, Governance and Markets. Amsterdam: Elsevier Science, 217-242.
McKinnon, R.I. (1973). Money and Capital in Economic Development. Washington, D.C.: Brookings Institution.
Rioja, F. and Valev, N. (2004a). "Does One Size Fit All? A Reexamination of the Finance and Growth Relationship." Journal of Development Economics 74, pp. 429-447.
____ (2004b). "Finance and the Sources of Growth at Various Stages of Economic Development." Economic Inquiry 42, pp. 127-140.
Robinson, J. (1952). The Rate of Interest and Other Essays. London: Macmillan.
Rousseau, P.L. and Wachtel, P. (2002). "Inflation Thresholds and the Finance-Growth Nexus." Journal of International Money and Finance 21, pp. 777-793.
Schwarz, A.M. (1992). "How Effective Are Directed Credit Policies in the United States? A Literature Survey." The World Bank Policy Research Working Paper Series No.: 1019.
Sen, K. and Vaidya, R. (1999). The Process of Financial Liberalization in India. Oxford: Oxford University Press.
Shaw, E.S. (1973). Financial Deepening in Economic Development. New York: Oxford University Press.
Stiglitz, J.E. (1994). "The Role of the State in Financial Markets," Bruno, M. and Pleskovic, B. (Ed), In: Proceedings of the World Bank Annual Conference on Development Economics, 1993: Supplement to The World Bank Economic Review and The World Bank Research Observer. Washington, D.C.: World Bank, 19-52.
Stiglitz, J.E. and Weiss, A. (1981). "Credit Rationing in Markets with Imperfect Information." American Economic Review 71, pp. 393-410.
Stock, J.H. and Watson, M.W. (1993). "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems." Econometrica 61, pp. 783-820.
Taylor, L. (1983). Structuralist Macroeconomics: Applicable Models for the Third World. New York: Basic Books.
van Wijnbergen, S. (1982). "Stagflationary Effects of Monetary Stabilization Policies: A Quantitative Analysis of South Korea." Journal of Development Economics 10, pp. 133-169.