Financial Development: Maturing and Emerging Policy Issues
The World Bank Research Observer, Volume 22, Issue 1, Spring 2007: pp. 67-102
36 Pages Posted: 8 Nov 2012 Last revised: 3 Jan 2013
Date Written: March 1, 2007
In recent decades, financial development policies in emerging market economies have been shaped by a fundamental shift toward market-based financial systems and the lessons from financial crises. Today, there is consensus that financial development depends on financial stability and convergence toward international standards. While the debate on some issues has matured, policy thinking in other areas is changing, fueled by recent experiences. This article analyzes the evolution of policy thinking on financial development and discusses three areas that are important to achieving deeper financial systems: stock market development, small- and medium-size enterprise financing, and defined-contribution pension systems. The main emerging issues in these areas are illustrated using recent experiences in Latin America. The article concludes that there is a need to take a fresh look at the evidence, improve diagnoses, and revisit expectations.
Keywords: financial development, financial stability, financial crises, financial sector reform, financial globalization, access to finance, Latin America
JEL Classification: F36, G15, G18, G20
Suggested Citation: Suggested Citation