Informational Quality of Financial Systems and Economic Development: An Indicators Approach for East Asia

Asian Development Bank Institute Working Paper No. 20

66 Pages Posted: 29 Jul 2001

See all articles by James H. Chan-Lee

James H. Chan-Lee

Asian Development Bank Institute

Sanghoon Ahn

Hitotsubashi University - Faculty of Economics

Date Written: June 2001

Abstract

The relation between the "informational quality" of financial systems and economic development is assessed for 21 OECD and 34 emerging market economies (EMEs) following Asia's 1997-98 crisis. Institutional economics suggest that the heart of any financial system is its institutional-informational infrastructure and long-term contracting capabilities. Twenty-seven microeconomic and institutional indicators are assessed to gauge the informational aspects of financial systems for 1995-1998 (with preliminary data for 1985). Recent institutional reforms are assessed vis-a-vis a statistical benchmark. This suggests disproportionate gains in per capita GDP from improving social infrastructure and that better enforcement rather than origins of legal systems are critical.

Keywords: information costs, quality of financial systems, economic development

JEL Classification: E44, G20, O10

Suggested Citation

Chan-Lee, James H. and Ahn, Sanghoon, Informational Quality of Financial Systems and Economic Development: An Indicators Approach for East Asia (June 2001). Asian Development Bank Institute Working Paper No. 20. Available at SSRN: https://ssrn.com/abstract=276670 or http://dx.doi.org/10.2139/ssrn.276670

James H. Chan-Lee

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F 3-2-5
Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

Sanghoon Ahn (Contact Author)

Hitotsubashi University - Faculty of Economics ( email )

Tokyo, 186-8601
Japan

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