The financial system and the financing of growth: a post-Keynesian alternative to the conventional view

Rogério Studart ()

Brazilian Journal of Political Economy, 1993, vol. 13, issue 1, 110-129

Abstract: Financial liberalization models have been for the last nineteen years the foundationof mainstream thinking on the role of financial markets and institutions in economicdevelopment and the basis for policymaking in many LDCs. This paper presents a criticalappraisal of the financial liberalization literature and points to an alternative view based onPost Keynesian theory. That alternative view is based on three aspects of monetary economics.First savings does not provide finance: the role of savings is not related to the financingof capital accumulation, but to its funding. Second, capital accumulation increases banks’fragility, which can be alleviated through funding. Finally, how we model the finance-investment-saving-funding circuit depends on institutions and conventions, which are evolving. JEL Classification: E21; E22; E12; G00.

Keywords: Financial system; investment; savings; liberalization; post-Keynesianism (search for similar items in EconPapers)
Date: 1993
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