Finance and Economic Development : Policy Choices for Developing Countries

The empirical literature on finance and development suggests that countries with better developed financial systems experience faster economic growth. Financial development-as captured by size, depth, efficiency, and reach of financial systems-varies sharply around the world, with large differences...

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Bibliographic Details
Main Author:	Demirgüç-Kunt, Aslı
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING ADVERSE EFFECTS AVERAGE INCOME BANK LENDING BANK LOANS BANK PRIVATIZATION BANKING CRISIS BANKING INDUSTRY BANKING SECTOR BANKING SERVICES BANKING SYSTEM BANKING SYSTEMS BANKS BONDS CAPITAL ADEQUACY CAPITAL FLOWS CAPITALIZATION COMPARATIVE ADVANTAGE COMPETITION POLICIES CONSOLIDATION CONTRACT ENFORCEMENT COUNTRY CASE COUNTRY REGRESSIONS CREDIT CONSTRAINTS CREDIT MARKET CROSS-COUNTRY DIFFERENCES CROSS-COUNTRY STUDIES CURRENCY BOARD DEPOSIT INSURANCE DEPOSITS DEREGULATION DEVELOPED COUNTRIES DEVELOPED ECONOMIES DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT DEVELOPMENT RESEARCH DIFFERENCES DISTRIBUTIONAL EFFECT DOMESTIC CURRENCIES DOMESTIC ECONOMY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE ECONOMIES OF SCALE EFFECTIVE GOVERNANCE EMPIRICAL EVIDENCE EMPIRICAL LITERATURE EMPIRICAL RESEARCH EMPIRICAL RESULTS EMPIRICAL STUDIES ESTIMATION TECHNIQUES EXCHANGE RATE EXCHANGE RATE POLICIES EXCHANGE RATE POLICY EXCHANGE RATE REGIME EXCHANGE RATES EXTERNAL SHOCKS FINANCIAL CRISES FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL FRAGILITY FINANCIAL INSTITUTIONS FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL PLANNING FINANCIAL REGULATION FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL POLICIES FOREIGN BANKS FOREIGN CURRENCY FOREIGN ENTRY GDP GDP PER CAPITA GINI COEFFICIENT GOVERNMENT INTERVENTION GOVERNMENT REGULATION GROWTH RATE GROWTH RATES HIGH INCOME COUNTRIES HIGH INFLATION HOUSEHOLD LEVEL INCOME DISTRIBUTION INCOME GROUPS INCOME INEQUALITY INCOME LEVEL INCOMES INFLATION INFLATION RATES INSTITUTIONAL DEVELOPMENT INSTITUTIONAL FRAMEWORK INSTITUTIONAL STRUCTURE INTEREST EXPENSE INTEREST INCOME INTEREST RATE INTEREST RATES INTERNATIONAL MARKETS INVESTMENT RATE LAWS LEGAL SYSTEM LENDER OF LAST RESORT LIQUID LIABILITIES LONG-RUN GROWTH LOW-INCOME COUNTRIES M2 MACROECONOMIC ENVIRONMENT MACROECONOMIC INSTABILITY MACROECONOMIC ISSUES MACROECONOMIC POLICIES MARKET CAPITALIZATION MARKET DISCIPLINE MARKET FAILURES MARKET IMPERFECTIONS MICROFINANCE MIDDLE CLASS MIDDLE INCOME COUNTRY NATIONAL POLICIES NEGATIVE IMPACT NET INTEREST MARGIN OWNERSHIP STRUCTURE PER CAPITA GROWTH POLICY DEBATE POLICY DISCUSSION POLICY OPTIONS POLICY RESEARCH POLITICAL ECONOMY POLITICAL INSTABILITY POLITICAL SYSTEM POLITICAL SYSTEMS POOR PEOPLE POSITIVE EFFECT POSITIVE IMPACT PRIVATE AGENTS PRIVATE INVESTMENT PRIVATE PROPERTY PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PRODUCTIVITY INCREASES PROFITABILITY PROPERTY RIGHTS PUBLIC POLICY PUBLIC SECTOR RAPID GROWTH REAL EXCHANGE REAL EXCHANGE RATES REAL INTEREST REAL INTEREST RATES REAL SECTOR REGULATORY CAPTURE RELATIVE IMPORTANCE RESOURCE ALLOCATION RISK MANAGEMENT SAFETY NET SAFETY NETS SAVINGS SAVINGS RATES SIGNIFICANT DIFFERENCES SIGNIFICANT IMPACT SMALL BUSINESS STABLE INFLATION STATE BANKS SUPERVISORY AGENCIES SYSTEMIC BANKING CRISES TAXATION TECHNOLOGICAL INNOVATION TRANSACTION COSTS TRANSITION COUNTRIES
Online Access:	http://documents.worldbank.org/curated/en/2006/06/6877447/finance-economic-development-policy-choices-developing-countries http://hdl.handle.net/10986/8415

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Summary:	The empirical literature on finance and development suggests that countries with better developed financial systems experience faster economic growth. Financial development-as captured by size, depth, efficiency, and reach of financial systems-varies sharply around the world, with large differences among countries at similar levels of income. This paper argues that governments play an important role in building effective financial systems and discusses different policy options to make finance work for development.

Finance and Economic Development : Policy Choices for Developing Countries

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