Financial Development: A Broader Perspective

22 Pages Posted: 22 Dec 2010 Last revised: 15 Jan 2011

See all articles by Richard Reid

Richard Reid

affiliation not provided to SSRN

Date Written: December 16, 2010

Abstract

This paper seeks to add to the current debate about financial development and growth in the emerging world by looking at how different financial systems evolve: how and why financial structures change during various stages of development, how best to measure them, and seeing what practical policy lessons can be drawn from historical experience. Some financial structures may be better suited to growth at certain stages of development but they may be less well suited in other circumstances. In the search for optimal financial structure, rather than attempt to adopt another country’s particular structure it may be more fruitful for today’s emerging world to concentrate more on addressing the needs of savers and borrowers in each individual system. A major lesson for the emerging world from past financial development is that there are risks involved in transitioning from one framework to another. Too fast a change increases the danger that all the necessary regulatory, supervisory and educational changes may not keep pace with the financial changes. This can increase the susceptibility to instability and reduce resilience to shocks.

Keywords: financial system development, history, measurement, policies, lessons

JEL Classification: E44, F00 F01, F02, G00, G01, G15, G18, G20, G38, N00, N01, N20, N30, N40, O10, O16

Suggested Citation

Reid, Richard, Financial Development: A Broader Perspective (December 16, 2010). ADBI Working Paper No. 258, Available at SSRN: https://ssrn.com/abstract=1729086 or http://dx.doi.org/10.2139/ssrn.1729086

ADBI Submitter (Contact Author)

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F 3-2-5
Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

Richard Reid

affiliation not provided to SSRN ( email )

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