Abstract
The increased financialization of a government bond market, and of the financial market actors active within that market, reduces government borrowing capacity. Reduced ability to trade risk, ceteris paribus, will result in lower costs of borrowing and a reduced probability of a debt crisis that forces fiscal retrenchment. Contrary to the expected results of financial market development, this study demonstrates, using the examples of Brazil, Lebanon and Turkey, that more financialized markets will, by constraining sustainable borrowing, limit emerging market government capacity. This questions the standard policy recommendations of IFIs for the increased financialization of market structures and reduced constraints on investor activities.
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© 2012 Iain Hardie
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Hardie, I. (2012). Conclusion. In: Financialization and Government Borrowing Capacity in Emerging Markets. International Political Economy Series. Palgrave Macmillan, London. https://doi.org/10.1057/9780230370265_6
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DOI: https://doi.org/10.1057/9780230370265_6
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-34788-9
Online ISBN: 978-0-230-37026-5
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