Informational Quality of Financial Systems and Economic Development : An Indicators Approach for East Asia

The relation between the "informational quality" of financial systems and economic development is assessed for 21 OECD and 34 emerging market economies (EMEs) following Asia's 1997-98 crisis. Institutional economics suggest that the heart of any financial system is its institutional-informational infrastructure and long-term contracting capabilities. Twenty-seven microeconomic and institutional indicators are assessed to gauge the informational aspects of financial systems for 1995-1998 (with preliminary data for 1985). Recent institutional reforms are assessed vis-a-vis a statistical benchmark. This suggests disproportionate gains in per capita GDP from improving social infrastructure and that better enforcement rather than origins of legal systems are critical