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Financial Sector Reforms in Developing Countries with Special Reference to Egypt

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  • Philip Arestis

Abstract

Financial reforms, and financial liberalization in particular, have been at the root of many recent cases of financial and banking crises. In several countries financial reforms allowed real interest rates to reach levels exceeding 20 percent per annum in some cases; in other cases, banking and financial crises led to currency crises. National governments either abandoned attempts at implementing financial liberalization (some countries even reimposed controls) or were forced to intervene by nationalizing banks and guaranteeing deposits. This paper draws on this experience to show that the main cause of these crises is the application of a theoretical framework that is predicated on a number of assumptions that are problematic and based on weak empirical foundations. Consequently, it should be no surprise that the reforms were often unsuccessful and in many cases led to severe financial crises. We will also argue that the case of Egypt is particularly interesting in this regard, since although financial reforms have been enacted, the experience has been rather different: there has been no accompanying financial crisis.

Suggested Citation

  • Philip Arestis, 2003. "Financial Sector Reforms in Developing Countries with Special Reference to Egypt," Economics Working Paper Archive wp_383, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_383
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    References listed on IDEAS

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    9. Arvind Subramanian, 1997. "The Egyptian Stabilization Experience; An Analytical Retrospective," IMF Working Papers 97/105, International Monetary Fund.
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    Cited by:

    1. Castaneda, Gonzalo, 2006. "Economic growth and concentrated ownership in stock markets," Journal of Economic Behavior & Organization, Elsevier, vol. 59(2), pages 249-286, February.
    2. repec:eee:riibaf:v:42:y:2017:i:c:p:1030-1039 is not listed on IDEAS
    3. repec:kap:iaecre:v:14:y:2008:i:4:p:422-432 is not listed on IDEAS
    4. Saoussen Ben Gamra & Mickaël Clévenot, 2006. "Libéralisation financière et crises bancaires dans les pays émergents," CEPN Working Papers hal-00188615, HAL.

    More about this item

    JEL classification:

    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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