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Strategies for Financial Reforms: Interest Rate Policies, Stabilization, and Bank Supervision in Developing Countries

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  • Delano Villanueva

    (International Monetary Fund)

  • Abbas Mirakhor

    (International Monetary Fund)

Abstract

Economic stability, effective bank supervision, and an appropriate sequencing of stabilization, banking regulations, and interest rate policies are identified as common characteristics of the relatively successful experiments in financial sector liberalization. Recent theoretical developments help to explain why interest rates in free markets may fall short of market-clearing levels, or may rise to risky levels, with adverse consequences for financial institutions and the economy at large. To prevent such outcomes, economic stabilization and improved bank supervision should generally precede complete removal of control on interest rates.

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Staff Papers - International Monetary Fund.

Volume (Year): 37 (1990)
Issue (Month): 3 (September)
Pages: 509-536

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Handle: RePEc:pal:imfstp:v:37:y:1990:i:3:p:509-536

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Cited by:
  1. James B. Ang, 2007. "Are Financial Sector Policies Effective in Deeping the Malaysian Financial System," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c012_031, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. Ang, James B., 2009. "Private Investment and Financial Sector Policies in India and Malaysia," World Development, Elsevier, Elsevier, vol. 37(7), pages 1261-1273, July.
  3. Muhammad Arshad Khan & Sajawal Khan, 2007. "Financial Sector Restructuring in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, Department of Economics, The Lahore School of Economics, vol. 12(Special E), pages 98-125, September.
  4. Joseph Bisignano, 1996. "Varieties of monetary operating procedures: balancing monetary objectives with market efficiency," BIS Working Papers 35, Bank for International Settlements.
  5. L. Deidda, 2000. "On the real effects of financial development," Working Paper CRENoS 200010, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  6. Elina Ribakova, 2005. "Liberalization, Prudential Supervision, and Capital Requirements," IMF Working Papers, International Monetary Fund 05/136, International Monetary Fund.
  7. Schweickert, Rainer, 1998. "Chancen und Risiken eines Currency Board Systems," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 1786, Kiel Institute for the World Economy (IfW).
  8. Khan, Muhammad Arshad, 2002. "Restructuring of Financial Sector in Pakistan," MPRA Paper 3921, University Library of Munich, Germany.
  9. Ang, James B., 2008. "What are the mechanisms linking financial development and economic growth in Malaysia," Economic Modelling, Elsevier, Elsevier, vol. 25(1), pages 38-53, January.
  10. Hiemenz, Ulrich & Agarwal, Jamuna Prasad & Langhammer, Rolf J. & Nunnenkamp, Peter & Spinanger, Dean, 1991. "The international competitiveness of developing countries for risk capital," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 747, Kiel Institute for the World Economy (IfW).
  11. James Ang, 2008. "Private Investment And Financial Sector Policies In Developing Countries," Development Research Unit Working Paper Series, Monash University, Department of Economics 07/08, Monash University, Department of Economics.
  12. Demetriades, Panicos O. & Andrianova, Svetlana, 2005. "Sources and Effectiveness of Financial Development: What We Know and What We Need to Know," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2005/76, World Institute for Development Economic Research (UNU-WIDER).
  13. Svetlana Andrianova & Panicos Demetriades & Anja Shortland, 2010. "Is Government Ownership of Banks Really Harmful to Growth?," Discussion Papers of DIW Berlin 987, DIW Berlin, German Institute for Economic Research.
  14. Ansari, M. I., 2002. "Impact of financial development, money, and public spending on Malaysian national income: an econometric study," Journal of Asian Economics, Elsevier, Elsevier, vol. 13(1), pages 72-93.
  15. Diehl, Markus & Schweickert, Rainer, 1998. "Currency crises: is Asia different?," Kiel Discussion Papers, Kiel Institute for the World Economy (IfW) 309, Kiel Institute for the World Economy (IfW).
  16. L. Deidda, 2001. "Financial Institutions' Expertise and Growth Effects of Financial Liberalisation," Working Paper CRENoS 200105, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  17. Schweickert, Rainer, 2000. "Leistungsbilanzentwicklung ausgewählter Schwellenländer Asiens und Lateinamerikas: Ursachen und wirtschaftspolitische Konsequenzen," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 2414, Kiel Institute for the World Economy (IfW).
  18. Willem Naude, 1995. "Financial liberalisation and interest rate risk management in Sub-Saharan Africa," Economics Series Working Papers, University of Oxford, Department of Economics WPS/1996-12, University of Oxford, Department of Economics.

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