Financial Liberalisation, Growth and Adjustment: Some Lessons from Developing Countries

The experience of developing countries has shown that successful financial liberalisation is clearly not a simple matter of ‘getting the prices right’. Attempts towards financial liberalisation in several Latin American countries have provoked major banking crises and related economic recessions, requiring subsequent government interventions at considerable economic cost. In various East Asian countries financial reforms are rated to have been more successful, but the common denominator to this success appears to lie in a very gradual and cautious approach towards financial liberalisation. Importantly, in these cases good economic performance preceded the liberalisation process and heavy government controls of the financial sector played a key role in successful industrial development. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.