Financial Liberalization in Developing Countries
by Ahmed, Abdullahi Dahir; Islam, Sardar M. N.Format: Hardcover
Pub. Date: 2009-10-01
Publisher(s): Physica Verlag
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Summary
The latest global financial and economic crisis of 2008 has shown the need to re-examine the desirability of financial liberalization. This book is undertaking such a study on the issue of financial and market liberalization by adopting sophisticated econometric methods. It examines the effects of financial liberalization on economic development and social welfare using a case study approach on a sample of three Sub-Saharan African and an Asian country in which financial liberalization reforms were implemented. Further, it highlights some key causes of the failure of reform, and the policies and institutions that are needed to create an environment for successful financial liberalization. From the detailed country assessments, various policies such as effective competition in the banking sector, sound legal system, fiscal discipline and financial institutional development are identified, adoption of which can improve the efficiency of resource allocation, boost savings and impact growth, and thus lead to welfare enhancement.
Table of Contents
| Introduction | p. 1 |
| Contemporary Issues in Finance | p. 1 |
| Financial Repression | p. 1 |
| Financial Liberalization | p. 2 |
| Financial Crisis and Financial Contagion | p. 2 |
| International Capital Mobility/Capital Control | p. 3 |
| Financial Liberalization: Opposing Views | p. 5 |
| Approaches to Financial Liberalization | p. 6 |
| Financial Liberalization and Country Experience in Africa and Asia | p. 7 |
| Benefits of Financial Liberalization: An Empirical Issue | p. 10 |
| The Objectives of this Book | p. 11 |
| Methodology | p. 12 |
| Time Series Financial Econometrics | p. 13 |
| Cost Benefit Analysis | p. 13 |
| Contribution of this Book | p. 13 |
| The Structure of the Book | p. 15 |
| Background, Structure and Financial Reforms | p. 17 |
| Introduction | p. 17 |
| The Case of Kenya | p. 20 |
| The Structure of the Financial System | p. 22 |
| Agricultural Sector and Other Policies Framework | p. 27 |
| Liberalization and the Era of Structural Adjustments | p. 31 |
| The Case of Malawi | p. 33 |
| Structure of the Financial System | p. 38 |
| Agricultural Sector and Other Policies Framework | p. 42 |
| The Case of Botswana | p. 47 |
| Structural Developments of the Financial System | p. 52 |
| Supplementing Role of Foreign Aid in Botswana: The Two-Gap Model | p. 58 |
| Trends and Policies in Agriculture and Other Sectors | p. 61 |
| The Thai Financial System | p. 66 |
| Conclusion | p. 67 |
| Literature Review | p. 69 |
| Introduction | p. 69 |
| Financial Development and Economic Development | p. 71 |
| Financial Liberalization | p. 74 |
| Financial Liberalization in Sub-Saharan Africa | p. 83 |
| The Thai Case | p. 87 |
| Conclusion | p. 89 |
| The Theory of Financial Liberalization and Its Economic Impact: An Assessment | p. 91 |
| Financial Liberalization | p. 91 |
| A Brief Theoretical Assessment | p. 91 |
| Observations from the Case Study | p. 98 |
| Contrasts between the Theory and Country Performance | p. 100 |
| Introduction | p. 100 |
| Economic Impact of the Recent Financial Reforms: Kenya | p. 101 |
| Malawi | p. 121 |
| Botswana | p. 129 |
| Conclusion | p. 139 |
| An Analysis of the Economic Outcome of Financial Liberalization | p. 141 |
| Introduction | p. 141 |
| A Simple Model of Imperfect Competition and Interest Rate Spread | p. 142 |
| Liberalization: Market Determined Outcome | p. 144 |
| Financial Repression | p. 146 |
| The Level of Fixed Costs as a Barrier to Entry | p. 152 |
| Graph of Fixed Cost and New Entry | p. 155 |
| Dynamics of how much the Interest Rate goes up after Liberalization | p. 160 |
| Financial Reforms and Absence of Entry by New Foreign Banks | p. 162 |
| Conclusion | p. 168 |
| Testing the Potential Impact of Economic Changes on Savings in African Countries | p. 175 |
| Introduction | p. 175 |
| Econometric Research on the Effect of Various Financial Conditionings | p. 176 |
| Reforms and Savings Mobilization: Comparative Analysis | p. 177 |
| Measures of Financial Liberalization | p. 187 |
| Basic Theory and Other Specifications | p. 189 |
| The Macroeconometric Model | p. 190 |
| VECM Set-up | p. 192 |
| Data and an Analysis of Econometric Results | p. 194 |
| Impacts of Market Liberalization on the Macroeconomy and Growth | p. 206 |
| Hypothetical Scenario for Kenya and Malawi | p. 212 |
| Conclusion | p. 216 |
| Welfare Implications of Financial Liberalization in Thailand: A Cost-Benefit Analysis | p. 221 |
| Introduction | p. 221 |
| Financial Liberalization and Its Implications in Thailand | p. 222 |
| Welfare Economics Framework: Social Choice and Cost Benefit Analysis of Globalization and Financial Liberalization | p. 223 |
| Costs and Benefits of Financial Liberalization (and Financial Crisis): Illustrative Numerical Estimation of the Costs and Benefits of Financial Liberalization | p. 226 |
| Financial Benefits | p. 226 |
| Financial Costs | p. 227 |
| Methodology, Numerical Estimates and Data Sources | p. 227 |
| Welfare Implications of Economic Growth | p. 231 |
| Conclusions | p. 233 |
| Summary, Findings and Conclusion | p. 249 |
| Background and Motivation | p. 249 |
| The Summary and Empirical Results | p. 250 |
| Policy and Institutional Implications | p. 252 |
| Appendix | p. 255 |
| Movement from Repression to Liberalization | p. 255 |
| Bibliography | p. 277 |
| Index | p. 293 |
| Table of Contents provided by Ingram. All Rights Reserved. |
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