Mother, Can I Trust the Government-Sustained Financial Deepening - A Political Institutions' View

43 Pages Posted: 1 Feb 2011

See all articles by Geneviève Verdier

Geneviève Verdier

affiliation not provided to SSRN

Marc Quintyn

International Monetary Fund (IMF)

Date Written: September 2010

Abstract

Only a minority of countries have succeeded in establishing a developed financial system, despite widespread financial liberalization. Confronted with this finding, the political institutions view claims that sustained financial deepening is most likely to take place in institutional environments where governments effectively impose constraints on their own powers in order to create trust. This paper identifies over 200 post-1960 episodes of accelerations in financial development in a large cross-section of countries. We find that the likelihood of an acceleration leading to sustained financial development increases greatly in environments that have high-quality political institutions.

Keywords: Credit expansion, Cross country analysis, Development, Economic growth, Financial systems, Governance, Political economy, Private sector

Suggested Citation

Verdier, Geneviève and Quintyn, Marc, Mother, Can I Trust the Government-Sustained Financial Deepening - A Political Institutions' View (September 2010). IMF Working Paper No. 10/210, Available at SSRN: https://ssrn.com/abstract=1750698

Geneviève Verdier

affiliation not provided to SSRN

No Address Available

Marc Quintyn (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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