Financial Infrastructure, Group Interests, and Capital Accumulation: Theory, Evidence, and Policy
IMF Working Papers, February 28, 2003
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- Financial Infrastructure, Group Interests, and Capital Accumulation: Theory, Evidence, and Policy
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Bibliographic details
- Authors: Biaggio Bossone, Sandeep Mahajan, Farah Zahir
- Published: February 28, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451844160.001
Theory and scope
- Presents a theory of financial infrastructure defined as "the set of rules, institutions, and systems within which agents carry out financial transactions."
- Investigates how financial infrastructure development affects:
- financial architecture,
- real capital accumulation,
- interactions with financial-sector special interests.
Core analytical predictions
- A more developed financial infrastructure:
- promotes financial market growth;
- reduces the scope of traditional banking;
- helps investors make more efficient investment decisions.
- The theory explains:
- why traditional banking predominates in the early stages of economic development and becomes relatively less important as the economy develops;
- why banks may retard financial sector development.
Evidence and main findings
- The study provides evidence in support of its predictions that infrastructure development shifts the balance away from traditional banking toward broader financial market activity and improved investment decision-making.
- Empirical and theoretical results are presented to link financial infrastructure development to real capital accumulation, taking account of financial-sector special interests.
Policy implications and recommendations
- Strengthening financial infrastructure can:
- facilitate financial market growth;
- reduce reliance on traditional banking as economies develop;
- improve allocative efficiency of investment decisions.
- Policies that consider the role of financial-sector special interests are important for enabling infrastructure-driven financial development and capital accumulation.
Publication and authorship (as stated in the source)
- By Biaggio Bossone, Sandeep Mahajan, Farah Zahir
- February 28, 2003
- Series: Working Paper No. 2003/024
- Issue: 024
- Volume: 2003
- Pages: 34
- DOI: https://doi.org/10.5089/9781451844160.001
- Stock No: WPIEA0242003
- ISBN: 9781451844160
- ISSN: 1018-5941
IMF Working Papers — "Financial Infrastructure, Group Interests, and Capital Accumulation: Theory, Evidence, and Policy" (Biaggio Bossone, Sandeep Mahajan, Farah Zahir, February 28, 2003).
Content in this bundle
- Financial Infrastructure, Group Interests, and Capital Accumulation - WP/03/24