Advanced Search
MyIDEAS: Login to save this paper or follow this series

Does financial reform increase or reduce savings ?

Contents:

Author Info

  • Bandiera, Oriana
  • Caprio, Gerard
  • Honohan, Patrick
  • Schiantarelli, Fabio

Abstract

Using Principal Components, the authors construct a 25-year time series index of financial liberalization for each of eight developing countries: Chile, Ghana, Indonesia, the Republic of Korea, Malaysia, Mexico, Turkey, and Zimbabwe. They use it in an econometric analysis of private saving in those countries. They find that the pattern of effects differs across countries. In sum, liberalization seems to have had a significant positive direct effect on saving in Ghana and Turkey and a negative effect in Korea and Mexico. No clear effect is discernible in the other countries. There is no evidence of significant, positive, and sizable interest-rate effects. Their results must be taken as an indication that there is no firm evidence that financial liberalization will increase saving. Indeed, under some circumstances, liberalization will be associated with a drop in saving. All in all, it would be unwise to rely on increased private saving as a channel through which financial liberalization can be expected to increase growth. Instead, improved resource allocation must be the primary channel.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2000/02/24/000094946_99031911114982/Rendered/PDF/multi_page.pdf
Download Restriction: no

Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2062.

as in new window
Length:
Date of creation: 28 Feb 1999
Date of revision:
Handle: RePEc:wbk:wbrwps:2062

Contact details of provider:
Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
Email:
Web page: http://www.worldbank.org/
More information through EDIRC

Related research

Keywords: Economic Theory&Research; Insurance&Risk Mitigation; Payment Systems&Infrastructure; Banks&Banking Reform; Environmental Economics&Policies; Banks&Banking Reform; Economic Theory&Research; Insurance&Risk Mitigation; Environmental Economics&Policies; Insurance Law;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Muellbauer, John, 1994. "The Assessment: Consumer Expenditure," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 10(2), pages 1-41, Summer.
  2. Corbo, Vittorio & Schmidt-Hebbel, Klaus, 1991. "Public policies and saving in developing countries," Policy Research Working Paper Series 574, The World Bank.
  3. Levine, Ross & Zervos, Sara, 1996. "Stock markets, banks, and economic growth," Policy Research Working Paper Series 1690, The World Bank.
  4. Panicos Demetriades & Kul B. Luintel, 1995. "The Direct Costs of Financial Repression: Evidence from India," Keele Department of Economics Discussion Papers (1995-2001), Department of Economics, Keele University 95/12, Department of Economics, Keele University.
  5. Attanasio, O.P. & Browning, M.J., 1993. "Consumption over the life cycle and over the business cycle," Discussion Paper, Tilburg University, Center for Economic Research 1993-14, Tilburg University, Center for Economic Research.
  6. John Y. Campbell & N. Gregory Mankiw, 1989. "Consumption, Income and Interest Rates: Reinterpreting the Time Series Evidence," NBER Chapters, in: NBER Macroeconomics Annual 1989, Volume 4, pages 185-246 National Bureau of Economic Research, Inc.
  7. van Wijnbergen, S., 1982. "Stagflationary effects of monetary stabilization policies : A quantitative analysis of South Korea," Journal of Development Economics, Elsevier, Elsevier, vol. 10(2), pages 133-169, April.
  8. Catherine Bonser-Neal & Kathryn L. Dewenter, 1996. "Does financial market development stimulate savings? Evidence from emerging market stock markets," Research Working Paper, Federal Reserve Bank of Kansas City 96-09, Federal Reserve Bank of Kansas City.
  9. Deaton, Angus S, 1977. "Involuntary Saving through Unanticipated Inflation," American Economic Review, American Economic Association, American Economic Association, vol. 67(5), pages 899-910, December.
  10. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(2), pages 223-47, April.
  11. Martin Browning & Annamaria Lusardi, 1995. "Household Saving: Micro Theories and Micro Facts," Department of Economics Working Papers 1995-02, McMaster University.
  12. Rudiger Dornbusch & Alejandro Reynoso, 1989. "Financial Factors in Economic Development," NBER Working Papers 2889, National Bureau of Economic Research, Inc.
  13. Joaquim Vieira Ferreira Levy & Jonathan David Ostry, 1994. "Household Saving in France," IMF Working Papers 94/136, International Monetary Fund.
  14. Engle, Robert F. & Yoo, Byung Sam, 1987. "Forecasting and testing in co-integrated systems," Journal of Econometrics, Elsevier, Elsevier, vol. 35(1), pages 143-159, May.
  15. Deaton, A., 1991. "Household Saving in LDC'S: Credit Markets, Insurance, And Welfare," Papers, Princeton, Woodrow Wilson School - Development Studies 153, Princeton, Woodrow Wilson School - Development Studies.
  16. Levine, Ross, 1996. "Financial development and economic growth : views and agenda," Policy Research Working Paper Series 1678, The World Bank.
  17. Jappelli, Tullio & Pagano, Marco, 1988. "Consumption and Capital Market Imperfection: An International Comparison," CEPR Discussion Papers, C.E.P.R. Discussion Papers 244, C.E.P.R. Discussion Papers.
  18. Alessi, R & Michael Devereux & Guglielmo Weber, 1993. "Intertemporal consumption, durables and liquidity constraints: a cohort analysis," IFS Working Papers, Institute for Fiscal Studies W93/07, Institute for Fiscal Studies.
  19. Schmidt-Hebbel, Klaus & Webb, Steven B & Corsetti, Giancarlo, 1992. "Household Saving in Developing Countries: First Cross-Country Evidence," World Bank Economic Review, World Bank Group, World Bank Group, vol. 6(3), pages 529-47, September.
  20. Miles, David, 1992. "Housing markets, consumption and financial liberalisation in the major economies," European Economic Review, Elsevier, Elsevier, vol. 36(5), pages 1093-1127, June.
  21. Koskela, Erkki & Loikkanen, Heikki A. & Viren, Matti, 1992. "House prices, household saving and financial market liberalization in Finland," European Economic Review, Elsevier, Elsevier, vol. 36(2-3), pages 549-558, April.
  22. Jonathan D. Ostry & Joaquim Levy, 1995. "Household Saving in France: Stochastic Income and Financial Deregulation," IMF Staff Papers, Palgrave Macmillan, vol. 42(2), pages 375-397, June.
  23. Deaton, Angus, 1991. "Saving and Liquidity Constraints," Econometrica, Econometric Society, Econometric Society, vol. 59(5), pages 1221-48, September.
  24. Bartolini, Leonardo & Drazen, Allan, 1997. "Capital-Account Liberalization as a Signal," American Economic Review, American Economic Association, American Economic Association, vol. 87(1), pages 138-54, March.
  25. Hall, Robert E, 1988. "Intertemporal Substitution in Consumption," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 96(2), pages 339-57, April.
  26. Jappelli, Tullio & Pagano, Marco, 1994. "Saving, Growth, and Liquidity Constraints," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 109(1), pages 83-109, February.
  27. Haque, Nadeem U & Montiel, Peter, 1989. "Consumption in Developing Countries: Tests for Liquidity Constraintsand Finite Horizons," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 408-15, August.
  28. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, Econometric Society, vol. 61(4), pages 783-820, July.
  29. Honohan, Patrick & Atiyas, Izak, 1989. "Intersectoral financial flows in developing countries," Policy Research Working Paper Series 164, The World Bank.
  30. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, Elsevier, vol. 115(1), pages 53-74, July.
  31. Vaidyanathan, Geetha, 1993. "Consumption, liquidity constraints and economic development," Journal of Macroeconomics, Elsevier, Elsevier, vol. 15(3), pages 591-610.
  32. Bayoumi, Tamim, 1993. "Financial Deregulation and Household Saving," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 103(421), pages 1432-43, November.
  33. repec:fth:harver:1435 is not listed on IDEAS
  34. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
  35. Campbell, John Y. & Mankiw, N. Gregory, 1991. "The response of consumption to income : A cross-country investigation," European Economic Review, Elsevier, Elsevier, vol. 35(4), pages 723-756, May.
  36. Olli-Pekka Lehmussaari, 1990. "Deregulation and Consumption: Saving Dynamics in the Nordic Countries," IMF Staff Papers, Palgrave Macmillan, vol. 37(1), pages 71-93, March.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications, Inter-American Development Bank, Research Department 4303, Inter-American Development Bank, Research Department.
  2. Eduardo Lora & Ugo Panizza, 2002. "Las reformas estructurales en América Latina bajo la lupa," Research Department Publications, Inter-American Development Bank, Research Department 4302, Inter-American Development Bank, Research Department.
  3. Aleš Bulíø & Andrew Swiston, 2009. "Emerging Market Countries Don’t Believe in Fiscal Stimuli: Should We Blame Ricardo?," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, Charles University Prague, Faculty of Social Sciences, vol. 59(2), pages 153-164, June.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2062. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.