The scope and limits of financial liberalisation in developing countries: A critical survey

This article reviews the growing literature on financial reform in developing countries. We draw both on the theoretical contributions outlining the case for and against liberalisation as well as on the experience of many developing countries with liberalisation. We argue that the existence of marke...

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Bibliographic Details
Published in:The Journal of development studies 1994-04, Vol.30 (3), p.578-628
Main Authors: Gibson, Heather D., Tsakalotos, Euclid
Format: Article
Language:English
Subjects:
Developing countries
Developing Nations
Economic Policy
Finance
Financial market
Financial reforms
Financial systems
Fiscal policy
LDCs
Liberalization
Limits
Public finance
Reforms
Surveys
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Summary:This article reviews the growing literature on financial reform in developing countries. We draw both on the theoretical contributions outlining the case for and against liberalisation as well as on the experience of many developing countries with liberalisation. We argue that the existence of market failures in financial markets hampers the liberalisation process and indeed suggests that the simple liberalising strategy envisaged in much of the literature is inappropriate. We argue instead for an alternative strategy which integrates some aspects of liberalisation with the development of appropriate financial institutions designed to serve best the needs of the real economy.
ISSN:0022-0388
1743-9140
DOI:10.1080/00220389408422329