Abstract
In this chapter I examine the effects of financial liberalization policies on poverty and try to answer the question as to whether these policies have helped the millions of poor people in the world.2; In the past couple of decades, many developing countries adopted and implemented financial liberalization policies. Prior to financial liberalization, the financial sector of developing countries had a number of common characteristics such as domestic credit controls, direct controls on interest rates and high reserve requirements. Interest rates were kept below equilibrium level;3 furthermore, credit allocation was rationed and directed to chosen priority sectors. Such policies were expected to promote investment and economic growth. The assumption behind these expectations was that there were sufficient loanable funds, but that the cost of capital was the binding constraint for capital accumulation.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Agénor, Pierre-Richard (2001), ‘Business Cycles, Economic Crises, and the Poor: Testing for Asymmetric Effects’, mimeo, Washington, DC: World Bank.
Amonoo, Edwin, P. Kojo Acquah and E. Ekow Asmah (2003), ‘The Impact of Interest Rates on Demand for Credit and Loan Repayment by the Poor and SMEs in Ghana’, IFLIP Research Paper 03–10.
Arestis, Philip and Asena Caner (2005), ‘Financial Liberalization and Poverty: Channels of Influence’, ch. 3 in Philip Arestis and Malcolm Sawyer (eds), Financial Liberalization: Beyond Orthodox Concerns, International Papers in Political Economy Series, Basingstoke, UK: Palgrave Macmillan.
Arestis, Philip and Asena Caner (2008), ‘Capital Account Liberalization and Poverty: How Close is the Link?’ TOBB University of Economics and Technology, Working Paper No. 08-11.
Arestis, Philip and Panicos Demetriades (1997), ‘Financial Development and Economic Growth: Assessing the Evidence’, Economic Journal, 107(442), 783–99.
Arestis, Philip and Murray Glickman (2002), ‘Financial Crisis in South East Asia: Dispelling Illusion the Minskyan Way’, Cambridge Journal of Economics, 26(2), 237–60. Reprinted in R.E. Allen (ed.), The International Library of Writings on the New Global Economy:The Political Economy of Financial Crises, Edward Elgar Publishing, 2004.
Arestis, Philip and Elias Karakitsos (2009), ‘Subprime Mortgage Market and Current Financial Crisis’, mimeo, Cambridge Centre for Economic and Public Policy, Department of Land Economy, University of Cambridge.
Ayyagari, Meghana, Asli Demirgüç-Kunt and Vojislav Maksimovic (2008), ‘Formal versus Informal Finance: Evidence from China’, World Bank Policy Research Working Paper 4465, Washington DC: World Bank.
Bandiera, Oriana, Gerard Caprio, Patrick Honohan and Fabio Schiantarelli (2000), ‘Does Financial Reform Raise or Reduce Saving’, Review of Economics and Statistics, 82(2), 239–63.
Beck, Thorsten, Asli Demirgüç-Kunt and Maria Soledad Martinez Peria (2007a), ‘Reaching Out: Access to and Use of Banking Services across Countries’, Journal of Financial Economics, 85(2), 234–66.
Beck, Thorsten, Asli Demirgüç-Kunt and Ross Levine (2007b), ‘Finance, Inequality and the Poor’, Journal of Economic Growth, 12(1), 27–49.
Chigumira, Gibson and Nicolas Masiyandima (2003), ‘Did Financial Sector Reform Result in Increased Savings and Lending for the SMEs and the Poor?’, IFLIP Research Paper 03-7.
Cull, Robert J., Asli Demirgüç-Kunt and Jonathan Morduch (2008), ‘Microfinance Meets the Market’, World Bank Policy Research Working Paper 4630, Washington DC: World Bank.
Demirgüç-Kunt, Asli and Ross Levine (2008), ‘Finance and Economic Opportunity’, World Bank Policy Research Working Paper 4468, Washington DC: World Bank.
Diwan, Ishac (2001), ‘Debt as Sweat: Labor, Financial Crises, and the Globalization of Capital’, mimeo, World Bank, July.
Dollar, David and Kraay, Aart (2002), ‘Growth Is Good for the Poor’, Journal of Economic Growth, 7(3), 195–225.
Foster, James E. and Miguel Szekely (2008), ‘Is Economic Growth Good for the Poor? Tracking Low Incomes Using General Means’, International Economic Review, 49(4), 1143–72.
Harrison, Ann (2002), ‘Has Globalization Eroded Labor’s Share? Some Cross-Country Evidence’, mimeo, Berkeley: University of California.
Honohan, Patrick (2004), ‘Financial Development, Growth and Poverty: How Close are the Links’, ch. 1 in G.A.E. Goodhart (ed.), Financial Development and Economic Growth: Explaining the Links, Basingstoke: Palgrave Macmillan.
Jalilian, Hossein and Colin Kirkpatrick (2002), ‘Financial Development and Poverty Reduction in Developing Countries’, International Journal of Finance and Economics, 7(1), 97–108.
Jayadev, Arjun (2007), ‘Capital Account Openness and the Labour Share of Income’, Cambridge Journal of Economics, 31(3), 423–43.
Kaminsky, Graciela Laura and Sergio L. Schmukler (2003), ‘Short-Run Pain, Long-Run Gain: The Effects of FL’, IMF Working Paper WP/03/34, Washington, DC: International Monetary Fund.
Lensink, Robert (1996), ‘The Allocative Efficiency of the Formal versus the Informal Financial Sector’, Applied Economics Letters, 3(3), 163–5.
Lustig, Nora (2000), ‘Crises and the Poor: Socially Responsible Macroeconomics’, Poverty and Inequality Advisory Unit Working Paper No. 108, Inter-American Development Bank (Sustainable Development Department): Brazil.
McKinnon, Ronald I. (1973), Money and Capital in Economic Development, Washington, DC: Brookings Institution.
Prasad, Eswar, Kenneth Rogoff, Shang-Jin Wei and M. Ayhan Kose (2003), ‘Effects of Financial Globalization on Developing Countries: Some Empirical Evidence’, IMF Board Document, Washington, DC: International Monetary Fund.
Ravallion, Martin (2001), ‘Growth, Inequality and Poverty: Looking Beyond Averages’, World Development, 29, 1803–16.
Rodrik, Dani (1997), Has Globalization Gone Too Far?, Washington, DC: Institute for International Economics.
Senses, Fikret (2008), ‘Missing Links in Poverty Analysis in the Age of Neo-Liberal Globalization: Some Lessons from Turkey’, mimeo, Middle East Technical University, Department of Economics.
Shaw, Edward S. (1973), Financial Deepening in Economic Development, New York: Oxford University Press.
Stiglitz, Joseph E. and Andrew Weiss (1981), ‘Credit Rationing in Markets with Imperfect Information,’ American Economic Review, 71(3), 393–410.
Thorbecke, Erik (2006), ‘The Evolution of the Development Doctrine, 1950–2005,’ UNU-WIDER Research Paper No. 2006/155.
United Nations (2000), United Nations Millenium Declaration. http://www.un.org/millenium/
World Bank (2001), World Development Report 2000/2001, New York: Oxford University Press.
World Bank (2007), Finance for All? Policies and Pitfalls in Expanding Access, World Bank Policy Research Report, August, Washington DC: World Bank.
Editor information
Copyright information
© 2010 Asena Caner
About this chapter
Cite this chapter
Caner, A. (2010). Does Financial Liberalization Help the Poor?. In: Fontana, G., McCombie, J., Sawyer, M. (eds) Macroeconomics, Finance and Money. Palgrave Macmillan, London. https://doi.org/10.1057/9780230285583_15
Download citation
DOI: https://doi.org/10.1057/9780230285583_15
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-31043-2
Online ISBN: 978-0-230-28558-3
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)