nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2006‒07‒15
four papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Financial Deregulation and Industrial Development: Subsequent Impact on Economic Growth in the Czech Republic, Hungary and Poland By Patricia McGrath; ;
  2. Can Miracles Lead to Crises? An Informational Frictions Explanation of Emerging Markets Crises By Emine Boz; University of Maryland
  3. Financial development in Latin America : big emerging issues, limited policy answers By Schmukler, Sergio L.; Gozzi, Juan Carlos; de la Torre, Augusto
  4. Relative Price Distortion and Optimal Monetary Policy in Open Economies By Jinill Kim

  1. By: Patricia McGrath; ;
    Abstract: The Czech Republic, Hungary and Poland all experienced an initial reduction in the number of industries and an increase in unemployment, once they moved to a market driven economy. Over time the unemployment problem reduced in significance though Poland still experiences high levels to date. Industries sprung up in the private sector in all three countries which counterbalanced the drop in state enterprises. Private sector industries all reported easy access to credit once the business set up while firms with head offices overseas tended to use the home country for borrowing purposes. For these companies, the most significant feature of financial deregulation in the Czech Republic, Hungary and Poland was that of freedom of capital movement, which increased both the level of business and investment opportunities. Results show that financial deregulation led to industrial development in all three countries. Tests to indicate the impact of industrial production on economic growth, show that for the three countries industrial production caused economic growth. This was a uni-directional causality.
    Keywords: Transition Economies, Industrial Development, Financial Deregulation, Economic Growth, Eastern Europe
    JEL: E E23 F43
    Date: 2006–02–01
  2. By: Emine Boz (Economics University of Maryland); University of Maryland
    Keywords: financial crises, emerging markets, informational frictions, learning
    JEL: F41 D82 G15
    Date: 2006–07–04
  3. By: Schmukler, Sergio L.; Gozzi, Juan Carlos; de la Torre, Augusto
    Abstract: This paper argues that the dominant policy paradigm on financial development is increasingly insufficient to address big emerging issues that are particularly relevant for financial systems in Latin America. This paradigm was shaped over the past decades by a fundamental shift in thinking toward market-based financial development and a complex process of financial crises interpretation. The result has been a richly textured policy paradigm focused on promoting financial stability and the convergence to international standards. It argues, however, that there is a growing dissonance between the current paradigm and the emerging issues, which is illustrated by discussing challenges in three areas: stock markets, small and medium enterprise loans, and defined-contribution pension funds. The paper concludes that the dominant policy paradigm is ill-suited to provide significant guidance in relation to the big emerging issues. It emphasizes the need to take a fresh look at the evidence, improve the diagnoses, revisit expectations, and revise the paradigm.
    Keywords: Financial Economics,Economic Theory & Research,Financial Intermediation,Macroeconomic Management,Markets and Market Access
    Date: 2006–07–01
  4. By: Jinill Kim (Federal Reserve Board)
    Keywords: Cost-Push Shocks; Relative Price Distortion; Interdependence; Open Economy; Optimal Policy
    JEL: E52 F33 F41
    Date: 2006–07–04

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