IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

The Future Of Financial Liberalization In South Asia

  • Ashima Goyal

    ()

    (Professor, Indira Gandhi Institute of Development Research, Mumbai, India)

This paper overviews financial liberalization in three South Asian countries — Bangladesh, India and Pakistan — in order to derive lessons for future reforms. It investigates how freeing domestic financial markets, improving capital account convertibility, and restructuring regulations have impacted the process of financial liberalization in South Asia. The paper shows that the capital account was most liberalized in Pakistan, and that Bangladesh had the least market development of the three countries under consideration. The study also reveals that of the two similar-sized countries (i.e. Bangladesh and Pakistan), Pakistan had experienced several financial crises that had required “external rescue”. Bangladesh, in contrast, needed external rescue only once. India did better than Pakistan and Bangladesh, most likely because it followed a strategic plan according to which full capital account liberalization followed the deepening of domestic markets and improvements to government finances. The experience of the global crisis validated the Indian strategy and demonstrated that foreign entry, while beneficial, cannot resolve all issues. We conclude that deepening domestic markets and better domestic and international regulation are necessary prerequisites for full convertibility, and that these preconditions will be best met if future liberalization is adapted to domestic needs such as financial inclusion, infrastructure finance, and market deepening.

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.unescap.org/sites/default/files/chap-3-AshimaGoyal.pdf
Download Restriction: no

Article provided by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in its journal Asia-Pacific Development Journal.

Volume (Year): 19 (2012)
Issue (Month): 1 (June)
Pages: 63-96

as
in new window

Handle: RePEc:unt:jnapdj:v:19:y:2012:i:1:p:63-96
Contact details of provider: Postal:
The United Nations Building, Rajadamnern Nok Avenue, Bangkok 10200

Phone: (66-2) 288-1234
Fax: (66-2) 288-1000
Web page: http://www.unescap.org/
Email:


More information through EDIRC

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. Goyal, Ashima, 2008. "Incentives from Exchange Rate Regimes in an Institutional Context," MPRA Paper 24310, University Library of Munich, Germany.
  2. Ashima Goyal, 2008. "The Structure of Inflation, Information and Labour Markets - Implications for monetary policy," Macroeconomics Working Papers 22378, East Asian Bureau of Economic Research.
  3. Khan, Rana Ejaz Ali & Hye, Qazi Muhammad Adnan, 2011. "Financial Liberalization And Demand For Money: A Case of Pakistan," MPRA Paper 34795, University Library of Munich, Germany.
  4. Ashima Goyal, 2010. "Regulatory Structure for Financial Stability and Development," Finance Working Papers 22778, East Asian Bureau of Economic Research.
  5. Caballero, Ricardo J. & Krishnamurthy, Arvind, 2004. "Smoothing sudden stops," Journal of Economic Theory, Elsevier, vol. 119(1), pages 104-127, November.
  6. Partha Sen, 2007. "Capital Inflows, Financial Repression And Macroeconomic Policy In India Since The Reforms," Working papers 157, Centre for Development Economics, Delhi School of Economics.
  7. Ashima Goyal, 2006. "Regulation and Deregulation of the Stock Market in India," Chapters, in: Deregulation and its Discontents, chapter 9 Edward Elgar Publishing.
  8. Ashima Goyal, 2009. "Global Financial Architecture : past and present arguments, advice, action," Finance Working Papers 22932, East Asian Bureau of Economic Research.
  9. Masahiro Kawai, 2010. "Reform Of The International Financial Architecture: An Asian Perspective," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 55(01), pages 207-242.
  10. Jonathan David Ostry & Atish R. Ghosh & Karl F Habermeier & Marcos d Chamon & Mahvash S Qureshi & Dennis B. S. Reinhardt, 2010. "Capital Inflows; The Role of Controls," IMF Staff Position Notes 2010/04, International Monetary Fund.
  11. S. Narayan, 2009. "India," Chapters, in: The Political Economy of Trade Reform in Emerging Markets, chapter 7 Edward Elgar Publishing.
Full references (including those not matched with items on IDEAS)

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

When requesting a correction, please mention this item's handle: RePEc:unt:jnapdj:v:19:y:2012:i:1:p:63-96. 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: (Macroeconomic Policy and Development Division, ESCAP)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.