Creating an Efficient Financial System : Challenges in a Global Economy

Financial sector development fosters economic growth and reduces poverty by widening and broadening access to finance and allocating society's savings more efficiently. The author first discusses three pillars on which sound and efficient financial systems are built: macroeconomic stability and effective and reliable contractual and informational frameworks. He then describes three different approaches to government involvement in the financial sector: the laissez-faire view, the market-failure view and the market-enabling view. Finally, the author analyzes the sequencing of financial sector reforms and discusses the benefits and challenges that emerging markets face when opening their financial systems to international capital markets.

Bibliographic Details

Main Author:	Beck, Thorsten
Language:	English
Published:	World Bank, Washington, DC 2006-02
Subjects:	ACCOUNTABILITY, ACCOUNTING, ACCOUNTING STANDARDS, ADVERSE SELECTION, AGENTS, AGRICULTURAL BANKS, AGRICULTURE, BANK FAILURE, BANK FAILURE RESOLUTION, BANK LOANS, BANK REGULATION, BANK RUNS, BANK SUPERVISION, BANKING CRISES, BANKING SECTOR, BANKING SYSTEM, BANKING SYSTEMS, BANKRUPTCY, BANKS, BOOMS, CAPITAL FLOWS, CAPITAL MARKETS, CAPITALIZATION, CENTRAL BANK, COMMERCIAL BANKS, COMPARATIVE ADVANTAGE, COMPETITIVENESS, CONTRACT ENFORCEMENT, CORPORATE GOVERNANCE, COUNTRY COMPARISONS, COVERAGE, CREDIT MARKETS, CROSS-COUNTRY EXPERIENCE, CURRENCY CRISES, DEBT, DEPOSIT INSURANCE, DEPOSIT INSURANCE SCHEMES, DEPOSITORS, DEPOSITS, DIVIDENDS, EARLY WARNING SYSTEM, ECONOMIC GROWTH, EMERGING ECONOMIES, EMERGING MARKETS, EXPECTED RETURN, FACTORING, FINANCIAL CONTRACTS, FINANCIAL CRISES, FINANCIAL FRAGILITY, FINANCIAL INSTITUTIONS, FINANCIAL INTEGRATION, FINANCIAL INTERMEDIARY DEVELOPMENT, FINANCIAL INTERMEDIATION, FINANCIAL LIBERALIZATION, FINANCIAL MARKETS, FINANCIAL REGULATION, FINANCIAL SECTOR, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL SECTOR REFORM, FINANCIAL SERVICES, FINANCIAL STABILITY, FINANCIAL STRUCTURE, FINANCIAL SYSTEMS, FOREIGN BANKS, FREE ENTRY, GDP, GDP PER CAPITA, GOVERNMENT BANKS, GOVERNMENT INTERVENTION, HOUSING, HOUSING FINANCE, INFLATION, INFLATION RATE, INFLATION RATES, INFORMATION COSTS, INSTITUTIONAL ENVIRONMENT, INSURANCE, INTERDEPENDENCE, INTEREST RATE, INTEREST RATES, INTERVENTION POWERS, JUDICIAL SYSTEMS, LAWS, LEGAL SYSTEMS, LIBERALIZATION OF FINANCIAL MARKETS, LIQUIDATION, LIQUIDITY, LOOTING, M2, MACROECONOMIC STABILITY, MARKET DISCIPLINE, MICROFINANCE, MORAL HAZARD, MORTGAGE LOANS, POSITIVE EFFECTS, PRIVATE BANKS, PRIVATE PROPERTY, PRIVATIZATION, PRODUCTIVITY, PRODUCTIVITY GROWTH, PROGRAMS, PROPERTY RIGHTS, REAL GDP, REGULATORY CAPTURE, RELATIONSHIP LENDING, RESOURCE ALLOCATION, RISK MANAGEMENT, RISK PREMIUMS, RISK TAKING, SAVINGS, SECURITIES, SECURITIES MARKETS, SHAREHOLDERS, SMALL BUSINESS, STOCK MARKETS, SUBORDINATED DEBT, SUPERVISORY FRAMEWORK, SYSTEMIC BANKING DISTRESS, TOTAL COSTS, TRADE BALANCE, TRANSACTION COSTS, TRANSPARENCY, VOLATILITY,
Online Access:	http://documents.worldbank.org/curated/en/2006/02/6606451/creating-efficient-financial-system-challenges-global-economy https://hdl.handle.net/10986/8764
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