Does Financial Liberalization Help the Poor?

Asena Caner

Chapter 15 in Macroeconomics, Finance and Money, 2010, pp 224-236 from Palgrave Macmillan

Abstract: Abstract In this chapter I examine the effects of financial liberalization policies on poverty and try to answer the question as to whether these policies have helped the millions of poor people in the world.2; In the past couple of decades, many developing countries adopted and implemented financial liberalization policies. Prior to financial liberalization, the financial sector of developing countries had a number of common characteristics such as domestic credit controls, direct controls on interest rates and high reserve requirements. Interest rates were kept below equilibrium level;3 furthermore, credit allocation was rationed and directed to chosen priority sectors. Such policies were expected to promote investment and economic growth. The assumption behind these expectations was that there were sufficient loanable funds, but that the cost of capital was the binding constraint for capital accumulation.

Keywords: Interest Rate; Financial Development; Income Share; Capital Account; Labour Share (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28558-3_15

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DOI: 10.1057/9780230285583_15

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