Potential and Pitfalls of Financial Liberalisation on Domestic and International Fronts

M.J. Fry

Working Papers from University of Birmingham - International Financial Group

Abstract: Fiscal difficulties frequently lie behind numerous features and problems of financial systems in developing countries. Many developing country governments find it virtually impossible to satisfy their intertemporal budget constraint with conventional tax revenue. Hence, they rely on revenue from the inflation tax and they reduce their interest costs through financial repression. Both the theoretical and empirical findings reviewed in this paper suggest that financial represssion is a particularly damaging quasi-tax from the perspective of economic growth.

Keywords: DEVELOPING COUNTRIES; FINANCIAL MARKET (search for similar items in EconPapers)
JEL-codes: O15 O23 (search for similar items in EconPapers)
Pages: 65 pages
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:fth:birmif:98-06

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