1887

UN Department of Economic and Social Affairs (DESA) Working Papers

The UN Department of Economic and Social Affairs (DESA) Working Papers aim to stimulate discussion and critical comment on the broad range of economic, social and environmental issues associated with the United Nations Development Agenda.

English

The Economic and Social Effects of Financial Liberalization

A Primer for Developing Countries

This paper considers the main elements of the standard pattern of financial liberalization that has become widely prevalent in developing countries. The theoretical arguments in favour of such liberalization are considered and critiqued, and the political economy of such measures is discussed. The problems for developing countries, with respect to financial fragility and the greater propensity to crisis, as well as the negative deflationary and developmental effects, are discussed. It is concluded that there is a strong case for developing countries to ensure that their own financial systems are adequately regulated with respect to their own specific requirements.

English

Keywords: financial liberalization, financial crisis, deflation, development banking, financial fragility
JEL: F43: International Economics / Macroeconomic Aspects of International Trade and Finance / Economic Growth of Open Economies; G15: Financial Economics / General Financial Markets / International Financial Markets; F41: International Economics / Macroeconomic Aspects of International Trade and Finance / Open Economy Macroeconomics
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