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

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Author Info

  • 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 Ang, 2008. "Private Investment And Financial Sector Policies In Developing Countries," Monash Economics Working Papers 07/08, Monash University, Department of Economics.
  2. James B. Ang, 2008. "Are Financial Sector Policies Effective In Deepening The Malaysian Financial System?," Contemporary Economic Policy, Western Economic Association International, vol. 26(4), pages 623-635, October.
  3. Khan, Muhammad Arshad & khan, Sajawal, 2007. "Financial Sector Restructuring in Pakistan," MPRA Paper 4141, University Library of Munich, Germany.
  4. 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.
  5. Diehl, Markus & Schweickert, Rainer, 1998. "Currency crises: is Asia different?," Kiel Discussion Papers 309, Kiel Institute for the World Economy (IfW).
  6. Ang, James B., 2009. "Private Investment and Financial Sector Policies in India and Malaysia," World Development, Elsevier, vol. 37(7), pages 1261-1273, July.
  7. Svetlana Andrianova & Panicos Demetriades & Anja Shortland, 2009. "Is Government Ownership of Banks Really Harmful to Growth?," CEDI Discussion Paper Series 09-05, Centre for Economic Development and Institutions(CEDI), Brunel University.
  8. Joseph Bisignano, 1996. "Varieties of monetary operating procedures: balancing monetary objectives with market efficiency," BIS Working Papers 35, Bank for International Settlements.
  9. Demetriades, Panicos O. & Andrianova, Svetlana, 2005. "Sources and Effectiveness of Financial Development: What We Know and What We Need to Know," Working Paper Series RP2005/76, World Institute for Development Economic Research (UNU-WIDER).
  10. Schweickert, Rainer, 1998. "Chancen und Risiken eines Currency Board Systems," Open Access Publications from Kiel Institute for the World Economy 1786, Kiel Institute for the World Economy (IfW).
  11. Khan, Muhammad Arshad, 2002. "Restructuring of Financial Sector in Pakistan," MPRA Paper 3921, University Library of Munich, Germany.
  12. Ansari, M. I., 2002. "Impact of financial development, money, and public spending on Malaysian national income: an econometric study," Journal of Asian Economics, Elsevier, vol. 13(1), pages 72-93.
  13. 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 747, Kiel Institute for the World Economy (IfW).
  14. Willem Naude, 1995. "Financial liberalisation and interest rate risk management in Sub-Saharan Africa," Economics Series Working Papers WPS/1996-12, University of Oxford, Department of Economics.

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