Relative Price Stability, Creditor Rights, and Financial Deepening
23 Pages Posted: 23 Aug 2007
Date Written: June 2007
Abstract
The paper provides a theoretical and cross-country empirical analysis of the determinants of financial deepening, and finds that higher credit-to-GDP ratios are associated with stronger creditor rights and lower inflation, and that the marginal effect of improvements in creditor rights protection is declining as the rate of inflation increases. The analysis suggests that in a high inflation environment, controlling inflation and reducing macroeconomic volatility should be given priority. Once these goals are achieved, the focus of attention should shift to creditor rights protection and credit information management.
Keywords: Working Paper, Credit, Inflation, Debt management
Suggested Citation: Suggested Citation
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