Strengthening Financial Markets for the Poor (original) (raw)

Financial Sector Policy and the Poor: Selected Findings and Issues

SSRN Electronic Journal, 2000

World Bank Working Papers are published to communicate the results of the Bank's work to the development community with the least possible delay. The manuscript of this paper therefore has not been prepared in accordance with the procedures appropriate to formallyedited texts. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of such boundaries.

Financial Sector Liberalisation: Should the Poor Applaud?

IDS Bulletin, 1998

instability, etc.). In many countries financial development has been severely repressed. For example, financial deepening in sub-Saharan Africa in 1980 was the same as in East Asia 20 years earlier, as indicated by estimates of M2IGDP (Cole and Duesenberry 1994). Thus, there remains a strong case for less meddling in financial sectors, especially to eliminate crude macroeconomic instruments like interest-rate ceilings. The purpose of the article is to examine how the poor might best be served when current approaches to financial sector development are applied to micro-finance. The article concludes that in spite of predictions by financial liberalisalion theory the poor are likely to remain underserved by the financial markets.

Financial deepening in sub-Saharan Africa : theory and innovations

1992

Mmis paper grew out of the background work done for two reports: Formal and Informal Finance for SMEs in Ghaua and the research proposal on Financial lategration and Development in Sun-Saharan Afica. William F. Steel provided valuable comments and editorial assistance and Wilson Peiris did the word processing he author w2ises to thank both of them and Carlos Cuevas and Tamara Duggleby for their thoughtful comments. TOWARD FNANCIAL DEEPENING IN SU1-SAHARAN AFRICA: AN ANALYTICAL FRAMEWORK Awell developed finanial system facilitates economic development through trade, saving, the efficient use of resources, and rik takig (Worid Bank 1989). A stable currency reduces the costs of economic transacons and promotes trade. Savings in financial form help to fund Investments. Financial intermediaries evaluate altemative investments, transform savings to meet their yield and risk characteristics, contribute to the efficient allocation of resources. Well-functioning financial institutions and instruments cnable an economy to exchange or pool risks. This paper discusses the transition towards a more developed fitancial system from a financially repressed and underdeveloped economy. The objective is to understand the pre requisites and necessary components of financial liberalization and to draw les3ons from eWperiences elsewhere that can help improve the design of financial sector reform in Affican countries. A. FINANCIAL REORM IN AFCA Facial sector ref3rm programs in Sub-Saharan Afica began in the 1980s. At present, such programs are underway in several countries, including Cote dIvoire, Ghana, Guinea, Madagascar, M,4ozambique, Nigeria and Tanzania. They initiated steps to establish more flenble interest rates, open credit markets and enhance financil intermediation. Vlllanueva (1988) classifies these countries into three groups: those which had the objective of Improving monetary control and those with the goal of improving the mobilization and allocation of domestic savings and the others whicui strived to improve the interest rate structure. 65 Lessons Learn The operations of PRIDE fmnish the following lessons about the financing of small-scale enterprises

Financial Sector Policy for Developing Countries

2002

The findings, interpretations, and conclusions expressed here are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data inicluded in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of such boundaries. xvi CESARE CALARI As a personal note, I would like to add that I have had the privilege of working with Millard on various occasions, particularly during the early years of my career with the World Bank Group. The lessons I learned from him have stayed with me, and none is greater than the power of ideas, when supported by sound research and intellectual integrity. It gives me, then, particular pleasure to sign this foreword. Note 1. By the mid-1990s, the International Monetary Fund was also stepping up its involvement in the field of financial sector policy, which has now been fully recognized in the work of the Monetary and Exchange Affairs Department and the newly created Capital Markets Department. Since 1999, the Fund has joined the Bank in launching a comprehensive country-by-country financial sector assessment program (FSAP), which places diagnostic work on a more systematic basis than had been possible in the past. References The word processed describes informally produced works that may not be commonly available through libraries.