Financial Liberalisation Case Study

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Part 1 - Introduction This is an assessment, regarding the importance of financial liberalisation programmes on the financial development of the emerging markets worldwide. In the following parts of the assignment, we will try to define financial liberalisation as a term. Furthermore, we will try to discuss and investigate the correlation of the financial liberalisation programmes with the financial development of the emerging markets in a worldwide scale. We can say that, we will focus on the ways that the different financial liberalisation programmes can lead to a financial sector growth in underdeveloped financial markets. In our effort we will use published relevant research journal papers that can give us proper scientific guidance on …show more content…

We can adopt the following as a definition of financial liberalisation in general terms. `Financial liberalisation is defined as the removal of government intervention from financial markets`. (Masci, 2008, p. 46) After adopting the above definition of financial liberalisation we can say that, when the uplifting of government intervention policies takes place, then there is going to be a change inside the market. Masci (2008, p. 46-47) supports the view that scientific research and our empirical evidence support that, the financial liberalisation programmes can have a two-way impact on a financial industry. Both of these ways can provide benefits for the economy but can also be costly for it as well. On one hand, financial liberalisation processes can enhance the pace of the economic growth of the market but on the other hand there is evidence that liberalisation programmes can decrease the stability level of the financial sector and thus making it more susceptible to a financial crisis event. We will try to investigate and understand the effects of financial liberalisation and more specifically we will try to understand the way its policies affect the development and the growth of the financial …show more content…

45) in their recent study, point out that in an emerging financial market, liberalization processes can have a significant negative impact on the stability of the domestic financial intermediation institutes. This is not an outcome of changes in the overall competition levels between the financial intermediaries but a result of an increase in the plurality of risk taking opportunities for the financial intermediaries. This negative impact that comes as a result of the financial liberalization programmes can be changed into a positive impact if more prudent capital regulations are

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