MSFS-679 Fin Reg & Reform in Dev Countries
Financial markets have grown in size and sophistication over the last decade in the developing, newly industrializing, and post-Communist world. Financial liberalization in these countries has often involved contrasting polices. On the one hand, governments in capital-scarce economies have retreated from direct involvement in the allocation of financial resources. On the other hand, government authorities have also intervened in financial markets to protect consumers and investors, to promote fairness and transparency in financial transactions, and to maintain stability. Financial crises in emerging markets throughout the 1990s, however, raise several questions regarding the effectiveness of the financial reforms undertaken in those countries. Meanwhile, more recent challenges to the global financial system have required governments and international financial institutions to rethink regulatory standards.
This seminar explores how and why governments intervene in financial markets. Four questions are of special importance:
(1) What impact do financial markets have on the economic performance of developing countries?
(2) What are the main dimensions along which financial systems vary across countries, and how do these differences matter?
(3) Why are financial systems “fragile” and what can governments do to ensure their stability?
(4) How do financial markets recover, and what can governments do to speed restructuring?
These questions are explored through a number of articles, books, reports, and case studies taken from different disciplines—finance, economics, public policy, and administrative studies—and from different international settings.
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