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Financial Liberalization Or Repression?

  • Ang, James

While financial liberalization has always been advocated in developing countries, experiences with it do not always produce desirable outcomes. In order to evaluate the costs and benefits associated with financial liberalization and repression, this study highlights that the overall effectiveness of the reform programs depends on the relative strength of each financial sector policy implemented. Using India as a case study, the results indicate that interest rate controls, statutory liquidity requirements and directed credit programs positively affect the level of financial development. A rise in cash reserve requirements appears to have an adverse effect on development of the financial system. The results lend some support to the argument that some form of financial restraints may help promote financial development.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14497.

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Date of creation: 2009
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Handle: RePEc:pra:mprapa:14497
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  24. M. Shahe Emran & Joseph E. Stiglitz, 2009. "Financial Liberalization, Financial Restraint and Entrepreneurial Development," Working Papers 2009-02, The George Washington University, Institute for International Economic Policy.
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  29. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
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