Mother, Can I Trust the Government? Sustained Financial Deepening

Download or read book Mother, Can I Trust the Government? Sustained Financial Deepening written by Ms.Genevieve Verdier and published by International Monetary Fund. This book was released on 2010-09-01 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Only a minority of countries have succeeded in establishing a developed financial system, despite widespread financial liberalization. Confronted with this finding, the political institutions view claims that sustained financial deepening is most likely to take place in institutional environments where governments effectively impose constraints on their own powers in order to create trust. This paper identifies over 200 post-1960 episodes of accelerations in financial development in a large cross-section of countries. We find that the likelihood of an acceleration leading to sustained financial development increases greatly in environments that have high-quality political institutions.