Policy recommendations and implications of research findings

Part of the Contributions to Economics book series (CE)


This final chapter summarizes the major findings of the thesis and discusses policy recommendations for banking sector reforms. It also discusses some limitations of the research methodology and the possibility of generalizing the findings. It concludes with some with suggestions for further avenues of research.


Financial Development Banking Sector Market Failure Policy Recommendation Foreign Bank 
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  1. 1.
    Fry (1995), p. 469.Google Scholar
  2. 2.
    See Morgan Stanley (2004), p. 24f.; Mukherji (2005), p. 66. Also large public sector borrowing from domestic banks may impede financial development. For a discussion on the relationship between fiscal policy and financial development, see Hauner (2006).Google Scholar
  3. 3.
    See Fan (2002), p. 12, Lal (2006), p. 280. Cutting the link between state-owned banks and state-owned enterprises with bad loans is an important step in escaping what Li (2001) calls the “trap of financial repression”. See Li (2001), pp. 83–85.Google Scholar
  4. 4.
    Anderson (2006), p. 248.Google Scholar
  5. 5.
    Nominal lending rates in China have between 1999 and 2004 been below 6%, which is lower than the yields on US Treasury security that are commonly used as benchmarks for risk-free investments. See International Monetary Fund (2006b).Google Scholar
  6. 6.
    See for example Demetriades and Luintel (1996a), Demetriades and Luintel (2001) and Diaz-Alejandro (1985).Google Scholar
  7. 7.
    See Rajan and Zingales (2003b), p. 31.Google Scholar
  8. 8.
    See for example McKinsey Global Institute (2006a); Organization for Economic Cooperation and Development (2005).Google Scholar

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© Physica-Verlag Heidelberg 2008

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