IDEAS home Printed from https://ideas.repec.org/p/imf/imfsdn/15-08.html
   My bibliography  Save this paper

Rethinking Financial Deepening; Stability and Growth in Emerging Markets

Author

Listed:
  • Ratna Sahay
  • Martin Cihak
  • Papa M N'Diaye
  • Adolfo Barajas
  • Diana B Ayala Pena
  • Ran Bi
  • Yuan Gao
  • Annette J Kyobe
  • Lam Nguyen
  • Christian Saborowski
  • Katsiaryna Svirydzenka
  • Reza Yousefi

Abstract

The global financial crisis experience shone a spotlight on the dangers of financial systems that have grown too big too fast. This note reexamines financial deepening, focusing on what emerging markets can learn from the advanced economy experience. It finds that gains for growth and stability from financial deepening remain large for most emerging markets, but there are limits on size and speed. When financial deepening outpaces the strength of the supervisory framework, it leads to excessive risk taking and instability. Encouragingly, the set of regulatory reforms that promote financial depth is essentially the same as those that contribute to greater stability. Better regulation—not necessarily more regulation—thus leads to greater possibilities both for development and stability.

Suggested Citation

  • Ratna Sahay & Martin Cihak & Papa M N'Diaye & Adolfo Barajas & Diana B Ayala Pena & Ran Bi & Yuan Gao & Annette J Kyobe & Lam Nguyen & Christian Saborowski & Katsiaryna Svirydzenka & Reza Yousefi, 2015. "Rethinking Financial Deepening; Stability and Growth in Emerging Markets," IMF Staff Discussion Notes 15/08, International Monetary Fund.
  • Handle: RePEc:imf:imfsdn:15/08
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=42868
    Download Restriction: no

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfsdn:15/08. 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: (Jim Beardow) or (Hassan Zaidi) The email address of this maintainer does not seem to be valid anymore. Please ask Hassan Zaidi to update the entry or send us the correct email address. General contact details of provider: http://edirc.repec.org/data/imfffus.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.