Linkages Between Financial Variables, Financial Sector Reform and Economic Growth and Efficiency
October 1, 1995
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Summary
This paper analyzes the different channels through which financial variables and financial sector reform can affect economic growth and efficiency, using panel data for 40 countries which reformed their financial systems. Financial sector reform is hypothesized to affect economic growth and efficiency through three main channels: the real interest rate representing the interest cost of capital, the volume of intermediation, and financial sector efficiency. The results indicate that financial reforms have structural effects; that financial variables and reforms are important determinants of economic performance; that the impact depends on whether countries did or did not face a financial crisis; and that the “quality” of financial sector reform matters.
Subject: Commercial banks, Financial crises, Financial sector development, Financial sector reform, Real interest rates
Keywords: crisis, crisis country, economic growth, efficiency, real interest rate, WP
Pages:
32
Volume:
1995
DOI:
Issue:
103
Series:
Working Paper No. 1995/103
Stock No:
WPIEA1031995
ISBN:
9781451948110
ISSN:
1018-5941
Notes
Uses panel data from 40 countries which have reformed their financial efficiency.
