Financial Development - Lessons for the Emerging World from Previous Periods of Industrialisation.
22 Oct 2009
Dr Richard Reid from the ICFR presented a paper at the Brookings Institution on: Financial development - lessons for the emerging world from previous periods of industrialisation.
Washington, USA
This paper seeked to add to the current debate about financial development and growth in the emerging world by looking at how different financial systems evolve: how and why financial structures change during various stages of development, how best to measure them, and seeing what practical policy lessons can be drawn from historical experience. Some financial structures may be better suited to growth at certain stages of development but they may be less well suited in other circumstances. Rather than attempt to apply a particular structure it may be more fruitful to concentrate more on addressing the needs of savers and borrowers in each individual system. A major lesson for the emerging world from past financial development is that there are risks involved in transitioning from one framework to another. Too fast a change increases the danger that all the necessary regulatory, supervisory and educational changes may not keep pace with the financial changes. This can increase the susceptibility to instability and reduce resilience to shocks.
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Dr Richard Reid
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