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Financial Liberalization Or Repression?

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Author Info
Ang, James

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Abstract

While financial liberalization has always been advocated in developing countries, experiences with it do not always produce desirable outcomes. In order to evaluate the costs and benefits associated with financial liberalization and repression, this study highlights that the overall effectiveness of the reform programs depends on the relative strength of each financial sector policy implemented. Using India as a case study, the results indicate that interest rate controls, statutory liquidity requirements and directed credit programs positively affect the level of financial development. A rise in cash reserve requirements appears to have an adverse effect on development of the financial system. The results lend some support to the argument that some form of financial restraints may help promote financial development.

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File URL: http://mpra.ub.uni-muenchen.de/14497/
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14497.

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Date of creation: 2009
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Handle: RePEc:pra:mprapa:14497

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Related research
Keywords: Financial development; financial liberalization;

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Find related papers by JEL classification:
E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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References listed on IDEAS
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    Other versions:
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    Other versions:
  6. Schwarz, Anita M., 1992. "How effective are directed credit policies in the United States? A literature survey," Policy Research Working Paper Series 1019, The World Bank. [Downloadable!]
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