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Banks That Don't Lend? Unlocking Credit to Spur Growth in Developing Countries
Author(s) -
Freedman Paul L.,
Click Reid W.
Publication year - 2006
Publication title -
development policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.671
H-Index - 61
eISSN - 1467-7679
pISSN - 0950-6764
DOI - 10.1111/j.1467-7679.2006.00325.x
Subject(s) - developing country , private sector , market liquidity , per capita , financial system , business , economics , monetary economics , economic policy , economic growth , population , demography , sociology
This article explores the level of liquidity within the banking systems of developing countries and the potential impact on rates of economic growth from prudently redirecting a portion of liquid assets into credit to the private sector. It finds that banks in developing countries are extremely liquid and growth rates per capita might increase substantially in response to heightened lending to the private sector. It then summarises the primary obstacles to this and presents several policy reforms that can augment the level of credit to the private sector in developing countries.