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The role of the financial sector in economic development. What are the risks and rewards of increased financial liberalisation?  

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Durham University DEPARTMENT OF ECONOMICS AND FINANCE The role of the financial sector in economic development. What are the risks and rewards of increased financial liberalisation? Contents: 1. Introduction............................................................1 2. The Role of the Financial Sector in Economic Development......................................................................1 3. Financial Liberalisation.............................................3 4. Advantages of Financial Liberalisation.........................5 5. Risks Inherent to Liberalisation..................................7 6. Conclusion............................................................9 Bibliography Appendix 1: ADVANTAGES OF FINANCIAL INTERMEDIATION Appendix 2: A SIMPLE DIAGRAM TO ILLUSTRATE THE MCKINNON-SHAW HYPOTHESIS 1. Introduction The topic of my essay covers one of the most distinguished areas in the theory of economics - financial sector. There is an enormous corpus of literature dedicated to this particular aspect and it was my intention to review only those that are very closely related to the role of financial system and financial liberalisation. To be able to assess the role of the financial sector and financial liberalisation, it is convenient to divide the title of this paper into several categories. In a subsequent section the role of...

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