Beck, Thorsten2012-06-222012-06-222006-02https://hdl.handle.net/10986/8764Financial sector development fosters economic growth and reduces poverty by widening and broadening access to finance and allocating society's savings more efficiently. The author first discusses three pillars on which sound and efficient financial systems are built: macroeconomic stability and effective and reliable contractual and informational frameworks. He then describes three different approaches to government involvement in the financial sector: the laissez-faire view, the market-failure view and the market-enabling view. Finally, the author analyzes the sequencing of financial sector reforms and discusses the benefits and challenges that emerging markets face when opening their financial systems to international capital markets.CC BY 3.0 IGOACCOUNTABILITYACCOUNTINGACCOUNTING STANDARDSADVERSE SELECTIONAGENTSAGRICULTURAL BANKSAGRICULTUREBANK FAILUREBANK FAILURE RESOLUTIONBANK LOANSBANK REGULATIONBANK RUNSBANK SUPERVISIONBANKING CRISESBANKING SECTORBANKING SYSTEMBANKING SYSTEMSBANKRUPTCYBANKSBOOMSCAPITAL FLOWSCAPITAL MARKETSCAPITALIZATIONCENTRAL BANKCOMMERCIAL BANKSCOMPARATIVE ADVANTAGECOMPETITIVENESSCONTRACT ENFORCEMENTCORPORATE GOVERNANCECOUNTRY COMPARISONSCOVERAGECREDIT MARKETSCROSS-COUNTRY EXPERIENCECURRENCY CRISESDEBTDEPOSIT INSURANCEDEPOSIT INSURANCE SCHEMESDEPOSITORSDEPOSITSDIVIDENDSEARLY WARNING SYSTEMECONOMIC GROWTHEMERGING ECONOMIESEMERGING MARKETSEXPECTED RETURNFACTORINGFINANCIAL CONTRACTSFINANCIAL CRISESFINANCIAL FRAGILITYFINANCIAL INSTITUTIONSFINANCIAL INTEGRATIONFINANCIAL INTERMEDIARY DEVELOPMENTFINANCIAL INTERMEDIATIONFINANCIAL LIBERALIZATIONFINANCIAL MARKETSFINANCIAL REGULATIONFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL SECTOR REFORMFINANCIAL SERVICESFINANCIAL STABILITYFINANCIAL STRUCTUREFINANCIAL SYSTEMSFOREIGN BANKSFREE ENTRYGDPGDP PER CAPITAGOVERNMENT BANKSGOVERNMENT INTERVENTIONHOUSINGHOUSING FINANCEINFLATIONINFLATION RATEINFLATION RATESINFORMATION COSTSINSTITUTIONAL ENVIRONMENTINSURANCEINTERDEPENDENCEINTEREST RATEINTEREST RATESINTERVENTION POWERSJUDICIAL SYSTEMSLAWSLEGAL SYSTEMSLIBERALIZATION OF FINANCIAL MARKETSLIQUIDATIONLIQUIDITYLOOTINGM2MACROECONOMIC STABILITYMARKET DISCIPLINEMICROFINANCEMORAL HAZARDMORTGAGE LOANSPOSITIVE EFFECTSPRIVATE BANKSPRIVATE PROPERTYPRIVATIZATIONPRODUCTIVITYPRODUCTIVITY GROWTHPROGRAMSPROPERTY RIGHTSREAL GDPREGULATORY CAPTURERELATIONSHIP LENDINGRESOURCE ALLOCATIONRISK MANAGEMENTRISK PREMIUMSRISK TAKINGSAVINGSSECURITIESSECURITIES MARKETSSHAREHOLDERSSMALL BUSINESSSTOCK MARKETSSUBORDINATED DEBTSUPERVISORY FRAMEWORKSYSTEMIC BANKING DISTRESSTOTAL COSTSTRADE BALANCETRANSACTION COSTSTRANSPARENCYVOLATILITYWorld Bank10.1596/1813-9450-3856