This paper shows how stock markets can accelerate growth and how policy can affect that growth either directly (by altering investment incentives) or indirectly (by changing the incentives underlying the creation of financial contracts). To help explain the role of financial markets in economic...

The authors investigate what has motivated the large portfolio flows to several developing countries in recent years. Using monthly data on U.S. capital flows to nine Latin American and nine Asian countries (instead of monthly reserves data), they analyze the behavior of bond and equity flows to...

Does risk perpetuate poverty in a credit-constrained economy? Jalan and Ravallion study portfolio and other behavioral responses to measured risk using household panel data for rural China. One-quarter of wealth is held in unproductive liquid forms. But only a small share of this appears to be a...

The author evaluates the costs and benefits of debt and debt service reduction (DDSR) from the point of view of five countries that have concluded Brady deals: Costa Rica, Mexico, the Philippines, Uruguay, and Venezuela. He concludes that, contrary to widely held views, commercial banks have...

In the long run, sound, efficient securities markets can contribute to economic growth; in the short run, they play an important role in financial liberalization. The author provides a guide to issues involved in institutional and regulatory reform of securities markets - and a discussion of the...

The authors developed a framework for analyzing the relationship between domestic financial markets and the effects of trade liberalization and applied it to Sri Lanka's experience between 1977 and 1987. They found that the domestic financial market significantly affects the outcome of trade...

The increased volatility of exchange rates, interest rates, and primary commodity prices over the past two decades has highlighted the importance for developing countries of managing these risks. Asset and liability management - a risk-management technique to systematically control price risks...

Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease the financing constraints of host country firms. But if incoming foreign investors borrow heavily from domestic banks, foreign direct investment...

The remarkable surge in private capital flow to developing countries since 1990 has greatly facilitated their rapid growth, at a time when OECD countries have been in, or passed through, recession. The importance of these flows to the current account of severallarge developing countries has...

Theory suggests that a currency union will impose significant macroeconomic disciplines on its members. This paper examines the two main surviving currency zones - the franc and rand zones in Africa - to learn whether and to what extent certain generally accepted theory is confirmed by the data....