Financial liberalization has not lived up to expectations, at least as far as interest rate spreads are concerned. Over the past decade, many countries in Latin America and the Caribbean have reformed their financial sectors and reaped major economic benefits as a result. However, the...

Over the last decade, many countries in Latin America have eliminated interest rate ceilings, reduced reserve requirements, and stopped direct credit controls. These market-oriented reforms have encouraged financial deepening, thereby producing considerable economic benefits to the countries....