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Linkages Between Financial Variables, Financial Sector Reform and Economic Growth and Efficiency
Author:
Mr. R. B. Johnston
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Ceyla Pazarbasioglu null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1995: Issue 103
Language:
English
Publication Date:
01 Oct 1995
DOI:
https://doi.org/10.5089/9781451948110.001
ISBN:
9781451948110
ISSN:
1018-5941
Pages:
32
Keywords:
WP; crisis country; crisis; economic growth; real interest rate; efficiency
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper analyzes the different channels through which financial variables and financial sector reform can affect economic growth and efficiency, using panel data for 40 countries which reformed their financial systems. Financial sector reform is hypothesized to affect economic growth and efficiency through three main channels: the real interest rate representing the interest cost of capital, the volume of intermediation, and financial sector efficiency. The results indicate that financial reforms have structural effects; that financial variables and reforms are important determinants of economic performance; that the impact depends on whether countries did or did not face a financial crisis; and that the “quality” of financial sector reform matters.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund