Financial Liberalization Or Repression?

James B. Ang ()

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: Financial development; financial liberalization (search for similar items in EconPapers)
JEL-codes: E58 O53 O16 E44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2009
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:14497

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