A Test of the Controversial Assumptions in the McKinnon-Shaw Hypothesis versus Neo-Structuralist Propositions An Empirical Test From a Field Survey in the Congo
This paper attempts to shed light on the efficiency/effectiveness issues of informal financial markets and the pattern of portfolio allocation shift in response to change in interest rate, in the process of financial liberalization. The two issues have been both controversial and hotly debated between proponents of the McKinnon-Shaw liberalization and Neo-structuralist economists. To examine whether interest rate changes are associated with the former or the latter view in the Congo we resort to a survey of household portfolio behavior in informal finance. Survey results suggest that informal finance is relatively effective in intermediating funds and providing financial services and access. In addition, the portfolio pattern indicates that households shift resource more from informal loan to deposits than from cash. These results provide some support for the Neostructuralists’argument; rejecting thus the McKinnon-Shaw argument that higher bank interest rates would generally increase investment.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Length: 13 pages Date of creation: 22 Nov 2005 Date of revision: Handle: RePEc:wpa:wuwpdc:0511025
Note: Type of Document - pdf; pages: 13. McKinnon-Shaw Hypothesis versus Neo-Structuralist assumption on the efficiency/effectiveness issues of informal financial markets Contact details of provider: Web page: http://129.3.20.41
For technical questions regarding this item, or to correct its listing, contact: (EconWPA).