Do Financial Sector Reforms Lead to Financial Development? Evidence from a New Dataset
IMF Working Papers, December 1, 2008
Source details
- Canonical URL
- Do Financial Sector Reforms Lead to Financial Development? Evidence from a New Dataset
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Bibliographic details
- Authors: Thierry Tressel, Enrica Detragiache
- Published: December 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451871234.001
Main research question and approach
- Research question: Whether policies that liberalized banking systems over past decades resulted in deeper credit markets.
- Measurement approach:
- A new banking reform index tracking policy changes in five separate areas.
- Coverage: 91 countries over 1973-2005.
Key findings
- Reforms have led to financial deepening, but only in countries with institutions that place checks and balances on political power.
- The authors interpret this as evidence of a complementarity between financial sector reforms and political institutions that protect property rights.
- Other country characteristics do not seem to significantly influence the effect of banking reforms on financial development.
Data and methods (summary)
- New index: policy changes in five separate areas of banking sector reform (index construction details not reproduced on this page).
- Sample size and period explicitly reported: 91 countries, 1973-2005.
Policy implications and interpretation
- Financial sector reforms alone may be insufficient to deepen credit markets.
- Reforms are most effective when combined with institutional checks and balances that protect property rights.
- Strengthening political institutions that constrain power may be a necessary complement to banking liberalization for financial development to occur.
Key statistics and publication metadata (as reported on the page)
- Sample: 91 countries.
- Sample period: 1973-2005.
- Number of policy areas in reform index: five separate areas.
- Pages: 42.
- Series/Issue: Working Paper No. 2008/265.
- DOI: https://doi.org/10.5089/9781451871234.001
- Publication date on page: December 1, 2008.
Source: Do Financial Sector Reforms Lead to Financial Development? Evidence from a New Dataset, IMF Working Paper No. 2008/265