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Central Banking, Financial Institutions And Credit Creation In Developing Countries

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  • Sebastian Dullien

Abstract

This paper examines how developing countries can embark on a sustained path of strong investment, capital accumulation and economic growth without capital imports. It is argued that the key lies in the Keynesian-Schumpeterian credit-investment nexus: Given certain preconditions, the central bank can allow a credit expansion which finances new investment and creates the savings necessary to balance the national accounts. It is further argued and confirmed in empirical data that one of the biggest impediments to such a process is formal or informal dollarization which limits the policy scope of the central bank. Moreover, a stable banking system with a broad outreach as well as a low degree of pass-through between the exchange rate and domestic prices seem to be a necessary condition for this process to work

Suggested Citation

  • Sebastian Dullien, 2009. "Central Banking, Financial Institutions And Credit Creation In Developing Countries," UNCTAD Discussion Papers 193, United Nations Conference on Trade and Development.
  • Handle: RePEc:unc:dispap:193
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    File URL: http://www.unctad.org/en/docs/osgdp20091_en.pdf
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    Cited by:

    1. Jörg Mayer, 2013. "Towards More Balanced Growth Strategies In Developing Countries: Issues Related To Market Size, Trade Balances And Purchasing Power," UNCTAD Discussion Papers 214, United Nations Conference on Trade and Development.
    2. Christopher L. Gilbert, 2010. "Speculative Influences On Commodity Futures Prices 2006-2008," UNCTAD Discussion Papers 197, United Nations Conference on Trade and Development.
    3. Giovanni Andrea Cornia & Bruno Martorano, 2012. "Development Policies and Income Inequality in Selected Developing Regions, 1980–2010," UNCTAD Discussion Papers 210, United Nations Conference on Trade and Development.
    4. Bicchetti, David & Maystre, Nicolas Maystre, 2013. "The synchronized and long-lasting structural change on commodity markets: Evidence from high frequency data," Algorithmic Finance, IOS Press, vol. 2(3-4), pages 233-239.
    5. Peter Bofinger, 2011. "The Scope For Foreign Exchange Market Interventions," UNCTAD Discussion Papers 204, United Nations Conference on Trade and Development.
    6. Carlos M. Correa, 2015. "Intellectual property: How much room is left for industrial policy?," UNCTAD Discussion Papers 223, United Nations Conference on Trade and Development.
    7. Andrew Cornford, 2014. "Macroprudential Regulation: Potential Implications For Rules For Cross-Border Banking," UNCTAD Discussion Papers 216, United Nations Conference on Trade and Development.
    8. Sebastian Dullien, 2010. "Risk factors in international financial crises: early lessons from the 2008-2009 turmoil," Competence Centre on Money, Trade, Finance and Development 1001, Hochschule fuer Technik und Wirtschaft, Berlin.
    9. André Nassif & Carmem Feijó & Eliane Araújo, 2015. "Structural change and economic development: is Brazil catching up or falling behind?," Cambridge Journal of Economics, Oxford University Press, vol. 39(5), pages 1307-1332.
    10. André Nassif & Carmem Feijó & Eliane Araújo, 2011. "The Long-Term “Optimal” Real Exchange Rate And The Currency Overvaluation Trend In Open Emerging Economies: The Case Of Brazil," UNCTAD Discussion Papers 206, United Nations Conference on Trade and Development.
    11. Dic Lo & Guicai Li & Yingquan Jiang, 2011. "Financial governance and economic development: making sense of the Chinese experience," PSL Quarterly Review, Economia civile, vol. 64(258), pages 267-286.
    12. Emanuele Bacchiocchi & Alessandro Missale, 2015. "Multilateral indexed loans and debt sustainability," Oxford Review of Economic Policy, Oxford University Press, vol. 31(3-4), pages 305-329.
    13. Ugo Panizza & Federico Sturzenegger & Jeromin Zettelmeyer, 2010. "International Government Debt," Business School Working Papers 2010-03, Universidad Torcuato Di Tella.
    14. Pilar Fajarnes, 2011. "An Overview Of Major Sources Of Data And Analyses Relating To Physical Fundamentals In International Commodity Markets," UNCTAD Discussion Papers 202, United Nations Conference on Trade and Development.
    15. Ulrich Hoffmann, 2015. "Can green growth really work and what are the true (socio-)economics of Climate Change?," UNCTAD Discussion Papers 222, United Nations Conference on Trade and Development.
    16. Shigehisa Kasahara, 2013. "The Asian Developmental State And The Flying Geese Paradigm," UNCTAD Discussion Papers 213, United Nations Conference on Trade and Development.
    17. Lo, Dic & Hong, Fuhai & Li, Guicai, 2016. "Assessing the role of inward foreign direct investment in Chinese economic development, 1990–2007: Towards a synthesis of alternative views," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 107-120.
    18. Jörg Mayer, 2010. "Global Rebalancing: Effects On Trade Flows And Employment," UNCTAD Discussion Papers 200, United Nations Conference on Trade and Development.
    19. Stephany Griffith-Jones, 2014. "A Brics Development Bank: A Dream Coming True?," UNCTAD Discussion Papers 215, United Nations Conference on Trade and Development.
    20. Amelia U. Santos-Paulino, 2012. "Trade, Income Distribution And Poverty In Developing Countries: A Survey," UNCTAD Discussion Papers 207, United Nations Conference on Trade and Development.
    21. Francis Enu-Kwesi & Frederick Koomson & Richard Baah-Mintah, 2013. "The Contribution Of The Kakum Rural Bank To Poverty Reduction In The Komenda-Edina-Eguafo-Abrem Municipality In The Central Region, Ghana," Economic Annals, Faculty of Economics, University of Belgrade, vol. 58(197), pages 121-140, April – J.
    22. Javier Lindenboim & Damián Kennedy & Juan M. Graña, 2011. "Share Of Labour Compensation And Aggregate Demand – Discussions Towards A Growth Strategy," UNCTAD Discussion Papers 203, United Nations Conference on Trade and Development.
    23. Filimonov, Vladimir & Bicchetti, David & Maystre, Nicolas & Sornette, Didier, 2014. "Quantification of the high level of endogeneity and of structural regime shifts in commodity markets," Journal of International Money and Finance, Elsevier, vol. 42(C), pages 174-192.

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