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Linkages Between Financial Variables, Financial Sector Reform and Economic Growth and Efficiency

Author

Listed:
  • Mr. R. B. Johnston
  • Ceyla Pazarbasioglu

Abstract

This paper analyzes the different channels through which financial variables and financial sector reform can affect economic growth and efficiency, using panel data for 40 countries which reformed their financial systems. Financial sector reform is hypothesized to affect economic growth and efficiency through three main channels: the real interest rate representing the interest cost of capital, the volume of intermediation, and financial sector efficiency. The results indicate that financial reforms have structural effects; that financial variables and reforms are important determinants of economic performance; that the impact depends on whether countries did or did not face a financial crisis; and that the “quality” of financial sector reform matters.

Suggested Citation

  • Mr. R. B. Johnston & Ceyla Pazarbasioglu, 1995. "Linkages Between Financial Variables, Financial Sector Reform and Economic Growth and Efficiency," IMF Working Papers 1995/103, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1995/103
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    Citations

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    Cited by:

    1. Kalbe Abbas & Manzoor Hussain Malik, 2008. "Impact of Financial Liberalisation and Deregulation on Banking Sector in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(3), pages 287-313.
    2. P. Honohan, 2000. "Banking System Failures in Developing and Transition Countries: Diagnosis and Prediction," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 29(1), pages 83-109, February.
    3. Holzmann, Robert, 1996. "Fiscal issues of shifting from unfunded to funded pension," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34300, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. repec:usm:journl:aamjaf00811__93-113 is not listed on IDEAS
    5. Patrick Honohan, 1998. "Diagnosing Banking System Failures in Developing Countries," Papers WP093, Economic and Social Research Institute (ESRI).
    6. Winkler, Adalbert, 1999. "Förderbanken als Instrument zur Verbesserung der Finanzierungssituation kleiner und mittlerer Unternehmen in den Transformationsstaaten Mittel- und Osteuropas," W.E.P. - Würzburg Economic Papers 2, University of Würzburg, Department of Economics.
    7. Jean-Claude Berthélemy & Aristomène Varoudakis, 1998. "Développement financier, réformes financières et croissance : une approche en données de panel," Revue Économique, Programme National Persée, vol. 49(1), pages 195-206.
    8. International Monetary Fund, 2001. "Bank Reform and Bank Efficiency in Pakistan," IMF Working Papers 2001/138, International Monetary Fund.
    9. Rekha Misra & Pallavi Chavan & Radheshyam Verma, 2016. "Agricultural Credit in India in the 2000s: Growth, Distribution and Linkages with Productivity," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 10(2), pages 169-197, May.
    10. Siti Muliana Samsi & Zarinah Yusof & Kee-Cheok Cheong, 2012. "Linkages Between the Real Sector and the Financial Sector: The Case of Malaysia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 8(Supp. 1), pages 93-113.
    11. Bonaccorsi di Patti, Emilia & Hardy, Daniel C., 2005. "Financial sector liberalization, bank privatization, and efficiency: Evidence from Pakistan," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2381-2406, August.
    12. Winkler, Adalbert, 1999. "Promotional banks as an instrument for improving the financing situation of small and medium-sized enterprises in the transition economies of Central and Eastern Europe: Some observations based on the," W.E.P. - Würzburg Economic Papers 2e, University of Würzburg, Department of Economics.
    13. Blommstein, Hans J. & Spencer, Michael G., 1996. "Sound finance and the wealth of nations," The North American Journal of Economics and Finance, Elsevier, vol. 7(2), pages 115-124.
    14. Pasali, Selahattin Selsah, 2013. "Where is the cheese ? synthesizing a giant literature on causes and consequences of financial sector development," Policy Research Working Paper Series 6655, The World Bank.

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