Financial Sector Reforms in Developing Countries with Special Reference to Egypt
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.
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.:
- Ajit Singh, 1998.
""Asian Capitalism" and the Financial Crisis,"
SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization.
1998-15, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
- Sebastian Edwards, 1989.
"On the Sequencing of Structural Reforms,"
NBER Working Papers
3138, National Bureau of Economic Research, Inc.
- Carmen M. Reinhart & Graciela L. Kaminsky, 1999.
"The Twin Crises: The Causes of Banking and Balance-of-Payments Problems,"
American Economic Review,
American Economic Association, vol. 89(3), pages 473-500, June.
- Reinhart, Carmen & Kaminsky, Graciela, 1999. "The twin crises: The causes of banking and balance of payments problems," MPRA Paper 14081, University Library of Munich, Germany.
- Graciela L. Kaminsky & Carmen M. Reinhart, 1996. "The twin crises: the causes of banking and balance-of-payments problems," International Finance Discussion Papers 544, Board of Governors of the Federal Reserve System (U.S.).
- Philip Arestis, 2002. "Financial crisis in Southeast Asia: dispelling illusion the Minskyan way," Cambridge Journal of Economics, Oxford University Press, vol. 26(2), pages 237-260, March.
- Arvind Subramanian, 1997. "The Egyptian Stabilization Experience; An Analytical Retrospective," IMF Working Papers 97/105, International Monetary Fund.
- Chang, Ha-Joon, 1998. "Korea: The misunderstood crisis," World Development, Elsevier, vol. 26(8), pages 1555-1561, August.
- Philip Arestis & Panicos O. Demetriades & Kul B. Luintel, 1997.
"Financial Development and Economic Growth: the Role of Stock Markets,"
Keele Department of Economics Discussion Papers (1995-2001)
97/05, Department of Economics, Keele University.
- Arestis, Philip & Demetriades, Panicos O & Luintel, Kul B, 2001. "Financial Development and Economic Growth: The Role of Stock Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(1), pages 16-41, February.
- Calvo, Guillermo A, 1988. "Servicing the Public Debt: The Role of Expectations," American Economic Review, American Economic Association, vol. 78(4), pages 647-61, September.
- Diaz-Alejandro, Carlos, 1985. "Good-bye financial repression, hello financial crash," Journal of Development Economics, Elsevier, vol. 19(1-2), pages 1-24.
- Arestis, Philip & Demetriades, Panicos O, 1997.
"Financial Development and Economic Growth: Assessing the Evidence,"
Royal Economic Society, vol. 107(442), pages 783-99, May.
- Panicos O. Demetriades & Philip Arestis, 1996. "Financial Development and Economic Growth: Assessing the Evidence," Keele Department of Economics Discussion Papers (1995-2001) 96/16, Department of Economics, Keele University.
- Rodrik, Dani, 1987. "Trade and capital-account liberalization in a keynesian economy," Journal of International Economics, Elsevier, vol. 23(1-2), pages 113-129, August.
- Enrica Detragiache & Asli DemirgÃ¼Ã§-Kunt, 1998.
"Financial Liberalization and Financial Fragility,"
IMF Working Papers
98/83, International Monetary Fund.
- McKinnon, Ronald I & Pill, Huw, 1997. "Credible Economic Liberalizations and Overborrowing," American Economic Review, American Economic Association, vol. 87(2), pages 189-93, May.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Leslie Teo & Charles Enoch & Carl-Johan Lindgren & TomÃ¡s J. T. BaliÃ±o & Anne Marie Gulde & Marc Quintyn, 2000. "Financial Sector Crisis and Restructuring; Lessons from Asia," IMF Occasional Papers 188, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:lev:wrkpap:wp_383. 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: (Marie-Celeste Edwards)
If references are entirely missing, you can add them using this form.