Financial Reform in Developing Countries: An Overview



For the large number of developing countries undergoing significant structural transformations, one of the most important and controversial adjustment areas is that of financial markets. Of the principal broad areas facing adjustment — which also include fiscal systems, labour markets, foreign trade regimes, investment incentives and the agricultural sector — the financial market may well be the most controversial and difficult market to transform. The consequences of poorly functioning or troubled financial sectors — on financial institutions, depositors, resource allocation and, ultimately, growth and development — are significant and well known. It is also now understood that financial liberalization is not an ‘event’, but rather a process. However, there is little consensus as to when to liberalize financial markets, or how it should be done. What emerges from the recent literature, including the chapters in this volume, is that financial liberalization should be one of the last stages of the economic reform process, as much a signal of successful reform and development in other parts of the economy as a cause of it.1


Monetary Policy Financial Market Central Bank Financial Development Financial Intermediation 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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© International Development Research Centre 1998

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