Summary of Rethinking Financial Deepening

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Rating

8 Overall

7 Importance

8 Innovation

8 Style


Recommendation

Generally, the development of a country’s financial system is a positive that helps grow its economy, promote savings and improve fiscal flexibility. But as the 2008 financial crisis illustrated, unfettered growth and lack of supervision can have negative consequences with global impacts. This erudite report from economists and researchers at the International Monetary Fund points out that the costs of financial development for emerging markets might outweigh its benefits. getAbstract recommends this astute analysis to economists, investors and financial professionals.

In this summary, you will learn

  • How financial development (FD) contributes to economic growth,
  • How three emerging market countries have managed their FD and
  • How developing countries can foster financial development in a responsible manner.
 

About the Authors

Ratna Sahay et al. are economists and researchers at the International Monetary Fund.

 

Summary

Financial development (FD), an important gauge of a country’s economic progress, refers to growth in a broad range of financial institutions, such as banks, pension funds and insurance companies, as well as in capital markets. FD assesses a system’s “depth,” or its market activity and liquidity; the extent of people’s “access” to financial services; and the system’s “efficiency” in offering affordable but profitable financial products and in maintaining dynamic capital markets.

In emerging economies, financial development has proceeded at a rapid clip but still lags that of advanced...


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