Creating an Efficient Financial System : Challenges in a Global Economy

35 Pages Posted: 20 Apr 2016

See all articles by Thorsten Beck

Thorsten Beck

City University London - The Business School; Tilburg University - European Banking Center, CentER

Date Written: February 1, 2006

Abstract

Financial sector development fosters economic growth and reduces poverty by widening and broadening access to finance and allocating society's savings more efficiently. The author first discusses three pillars on which sound and efficient financial systems are built: macroeconomic stability and effective and reliable contractual and informational frameworks. He then describes three different approaches to government involvement in the financial sector: the laissez-faire view, the market-failure view and the market-enabling view. Finally, the author analyzes the sequencing of financial sector reforms and discusses the benefits and challenges that emerging markets face when opening their financial systems to international capital markets.

Keywords: Banks & Banking Reform, Debt Markets, Access to Finance, Financial Intermediation

Suggested Citation

Beck, Thorsten, Creating an Efficient Financial System : Challenges in a Global Economy (February 1, 2006). World Bank Policy Research Working Paper No. 3856, Available at SSRN: https://ssrn.com/abstract=922982

Thorsten Beck (Contact Author)

City University London - The Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

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