European Parliament Library

Welfare Gains from Financial Liberalization, Kenichi Ueda, Robert Townsend

Financial liberalization has been a controversial issue as there is little empirical evidence for its positive effects on economic growth. However, we find sizable welfare gains, 1 to 28 percent of permanent consumption though, consistent with the literature, the gain in the economic growth is ambiguous, -0.2 to 0.7 percent. We apply a canonical growth model with endogenous financial deepening to Thailand, 1976-96. As effective bank transaction costs decline, more people take advantage of financial services. We estimate the gains by comparing model simulations under the historical episode of financial liberalization to those under a hypothetical continuation of financial repression
Table Of Contents
Content; I. Introduction; II. Related Literature; III. Thai Financial Sector Policy; IV. The Model; A. Notation; B. Recursive Formulation; C. Solutions of Value Functions and Policies; V. Setup for Numerical Analysis; Tables; 1. Parameter Values; VI. Calibration; VII. Welfare Gains; VIII.Discussion; A. Sensitivity Analysis; B. Comparison to Business Cycle Literature; IX. Concluding Remarks; References; Figures; 1. Financial Liberalization and Gini of Tobin's Q; 2. Inflation, Deposit Rate, and Spread; 3. Real Growth of Deposits; 4. Use of Savings; 5. Value Functions; 6. Policy Functions
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (42 p.)
Specific Material Designation
Form Of Item

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