Financial Sector Reforms in East Asia: A Survey of the Theoretical and Empirical Literature (1990-2000s)

Abstract

The 1990s have been years of activism. The developed countries and most international financial organizations have been urging the developing countries to undertake rapid and comprehensive domestic and external financial liberalization. The crises that followed have now instilled a dose of caution. Liberalization is a risky step, one on which knowledge remains rudimentary. It concerns many different aspects. There is no urgency to undertake liberalization, and when it is taken, it should be approached as a delicate step calling for cautious policy reactions. The main focus of this paper is a survey of the modern theoretical and empirical literature on the topic of a financial sector reform in East Asian region. The paper is organized as following. Section 2 is devoted to financial liberalization as a main part of financial reforms, existing approaches for its implementation and potential positive or/and negative results of it. Section 3 is about financial reforms in East Asia. Section 4 offers some lessons from financial liberalization. Deep doubts, deep wisdom; small doubts, little wisdom. Chinese proverb