Demirgüç-Kunt, Aslı2012-06-192012-06-192006-06https://hdl.handle.net/10986/8415The empirical literature on finance and development suggests that countries with better developed financial systems experience faster economic growth. Financial development-as captured by size, depth, efficiency, and reach of financial systems-varies sharply around the world, with large differences among countries at similar levels of income. This paper argues that governments play an important role in building effective financial systems and discusses different policy options to make finance work for development.CC BY 3.0 IGOACCOUNTINGADVERSE EFFECTSAVERAGE INCOMEBANK LENDINGBANK LOANSBANK PRIVATIZATIONBANKING CRISISBANKING INDUSTRYBANKING SECTORBANKING SERVICESBANKING SYSTEMBANKING SYSTEMSBANKSBONDSCAPITAL ADEQUACYCAPITAL FLOWSCAPITALIZATIONCOMPARATIVE ADVANTAGECOMPETITION POLICIESCONSOLIDATIONCONTRACT ENFORCEMENTCOUNTRY CASECOUNTRY REGRESSIONSCREDIT CONSTRAINTSCREDIT MARKETCROSS-COUNTRY DIFFERENCESCROSS-COUNTRY STUDIESCURRENCY BOARDDEPOSIT INSURANCEDEPOSITSDEREGULATIONDEVELOPED COUNTRIESDEVELOPED ECONOMIESDEVELOPING COUNTRIESDEVELOPING ECONOMIESDEVELOPMENTDEVELOPMENT RESEARCHDIFFERENCESDISTRIBUTIONAL EFFECTDOMESTIC CURRENCIESDOMESTIC ECONOMYECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC PERFORMANCEECONOMIES OF SCALEEFFECTIVE GOVERNANCEEMPIRICAL EVIDENCEEMPIRICAL LITERATUREEMPIRICAL RESEARCHEMPIRICAL RESULTSEMPIRICAL STUDIESESTIMATION TECHNIQUESEXCHANGE RATEEXCHANGE RATE POLICIESEXCHANGE RATE POLICYEXCHANGE RATE REGIMEEXCHANGE RATESEXTERNAL SHOCKSFINANCIAL CRISESFINANCIAL DEPTHFINANCIAL DEVELOPMENTFINANCIAL FRAGILITYFINANCIAL INSTITUTIONSFINANCIAL LIBERALIZATIONFINANCIAL MARKETSFINANCIAL PLANNINGFINANCIAL REGULATIONFINANCIAL SECTORFINANCIAL SERVICESFINANCIAL STABILITYFINANCIAL STRUCTUREFINANCIAL SYSTEMFINANCIAL SYSTEMSFISCAL POLICIESFOREIGN BANKSFOREIGN CURRENCYFOREIGN ENTRYGDPGDP PER CAPITAGINI COEFFICIENTGOVERNMENT INTERVENTIONGOVERNMENT REGULATIONGROWTH RATEGROWTH RATESHIGH INCOME COUNTRIESHIGH INFLATIONHOUSEHOLD LEVELINCOME DISTRIBUTIONINCOME GROUPSINCOME INEQUALITYINCOME LEVELINCOMESINFLATIONINFLATION RATESINSTITUTIONAL DEVELOPMENTINSTITUTIONAL FRAMEWORKINSTITUTIONAL STRUCTUREINTEREST EXPENSEINTEREST INCOMEINTEREST RATEINTEREST RATESINTERNATIONAL MARKETSINVESTMENT RATELAWSLEGAL SYSTEMLENDER OF LAST RESORTLIQUID LIABILITIESLONG-RUN GROWTHLOW-INCOME COUNTRIESM2MACROECONOMIC ENVIRONMENTMACROECONOMIC INSTABILITYMACROECONOMIC ISSUESMACROECONOMIC POLICIESMARKET CAPITALIZATIONMARKET DISCIPLINEMARKET FAILURESMARKET IMPERFECTIONSMICROFINANCEMIDDLE CLASSMIDDLE INCOME COUNTRYNATIONAL POLICIESNEGATIVE IMPACTNET INTEREST MARGINOWNERSHIP STRUCTUREPER CAPITA GROWTHPOLICY DEBATEPOLICY DISCUSSIONPOLICY OPTIONSPOLICY RESEARCHPOLITICAL ECONOMYPOLITICAL INSTABILITYPOLITICAL SYSTEMPOLITICAL SYSTEMSPOOR PEOPLEPOSITIVE EFFECTPOSITIVE IMPACTPRIVATE AGENTSPRIVATE INVESTMENTPRIVATE PROPERTYPRIVATE SECTORPRODUCTIVITYPRODUCTIVITY GROWTHPRODUCTIVITY INCREASESPROFITABILITYPROPERTY RIGHTSPUBLIC POLICYPUBLIC SECTORRAPID GROWTHREAL EXCHANGEREAL EXCHANGE RATESREAL INTERESTREAL INTEREST RATESREAL SECTORREGULATORY CAPTURERELATIVE IMPORTANCERESOURCE ALLOCATIONRISK MANAGEMENTSAFETY NETSAFETY NETSSAVINGSSAVINGS RATESSIGNIFICANT DIFFERENCESSIGNIFICANT IMPACTSMALL BUSINESSSTABLE INFLATIONSTATE BANKSSUPERVISORY AGENCIESSYSTEMIC BANKING CRISESTAXATIONTECHNOLOGICAL INNOVATIONTRANSACTION COSTSTRANSITION COUNTRIESWorld Bank10.1596/1813-9450-3955