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Mother, Can I trust the Government?Sustained Financial Deepening - A Political InstitutionsView

Author/Editor: Quintyn, Marc | Verdier, Geneviève
Authorized for Distribution: September 1, 2010
Electronic Access: Free Full Text (PDF file size is 1,328KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: Only a minority of countries have succeeded in establishing a developed financial system, despite widespread financial liberalization. Confronted with this finding, the political institutions view claims that sustained financial deepening is most likely to take place in institutional environments where governments effectively impose constraints on their own powers in order to create trust. This paper identifies over 200 post-1960 episodes of accelerations in financial development in a large cross-section of countries. We find that the likelihood of an acceleration leading to sustained financial development increases greatly in environments that have high-quality political institutions.
 
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Series: Working Paper No. 10/210
Subject(s): Credit expansion | Cross country analysis | Development | Economic growth | Financial systems | Governance | Political economy | Private sector
 
English  
    Published:   September 1, 2010        
            Format:   Paper
    Stock No:   WPIEA2010210   Pages:   42
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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