This paper examines a set of financial policies, called financial restraint, that address financial market stability and growth in an initial environment of low financial deepening. Unlike with financial repression, where the government extracts rents from the private sector, financial restraint...

This paper asks the question under what circumstances banks have incentives to increase the deposit collection, when the deposit market is not fully penetrated, i.e. when there is low financial depths. We compare outcomes under a perfectly competitive deposit market with outcomes under financial...