Arbeitspapier

Why isn't there more financial intermediation in developing countries?

This paper proposes to organize thinking about the opportunities for improving and extending financial markets and safety nets for the poor, by focusing on factors that may explain why the linkage of local financial networks and safety nets with the larger economy often fails or is incomplete. Understanding the nature of these impediments is the first step in proposing policies to help promote more effective linkage and intermediation. We propose four explanations for the slowness of adoption of intermediation (high costs of delegated monitoring aggravated by limited intermediary capital; lock-in and crowding out effects from local insurance arrangements, social norms against cooperation with intermediaries; and political resistance to new institutions that shift the balance of power in local polities). Of course, financial repression and weak legal systems remains important as cause of lack of intermediation. We conclude with a review of public policy for more effective intermediation.

ISBN
929190175X
Language
Englisch

Bibliographic citation
Series: WIDER Discussion Paper ; No. 2002/28

Classification
Wirtschaft
Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
Agricultural Finance
Economic History: Financial Markets and Institutions: General, International, or Comparative
Subject
financial intermediation
mutual insurance
safety nets
microfinance
microcredit
Finanzintermediär
Entwicklungsländer
Privatversicherung
Mikrofinanz

Event
Geistige Schöpfung
(who)
Conning, Jonathan
Kevane, Michael
Event
Veröffentlichung
(who)
The United Nations University World Institute for Development Economics Research (UNU-WIDER)
(where)
Helsinki
(when)
2002

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Conning, Jonathan
  • Kevane, Michael
  • The United Nations University World Institute for Development Economics Research (UNU-WIDER)

Time of origin

  • 2002

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