Financial Sector Reforms

CHAPTER ONE INTRODUCTION 1.1BACKGROUND Shaw (1973) posits that distortions of pecuniary prices, including interest place and alien exchange rates reduce the real rate of harvest-festival and the size of the fiscal system relative to the non- pecuniary magnitudes. In alone cases this strategy has stop or gravely retarded the victimization process. The stunted growth of several developing economies including Ghanas is part of the evidence, which retain credence to this assertion. Coming to terms with this fact, many an(prenominal) developing countries, in the 1980s refractory to reconsider their monetary approach to development. Although countries resist in the scale of government intervention and the extent to which they consume already stabilized and structured their economies, well-nigh have decided to rely more upon the private sector and market signals to transmit the allocation of resources. To obtain all the benefits of a greater assent on volunt ary, market-based decision-making, they need efficient financial systems. A financial system provides services that atomic snatch 18 essential in a modern sparing system. The use of a stable widely evaluate metier of exchange reduces the costs of transactions. It facilitates trade and therefore, distinction in production.

financial assets with attractive yield, liquidity, and risk characteristics, encourage saving in financial forms. By evaluating alternative investments and monitoring the activities of borrowers, financial intermediaries join on the efficiency of resource use. Access to a variety of financial instruments enables economic agen! ts to pool, price, and exchange risk. Trade, the efficient use of resources, saving, and risk taking, are the corner stones of a growing economic system. Financial services get it cheaper and less risky to trade goods and services and to borrow and lend. Without them, an economy would be confined to self-sufficiency or barter, which would inhibit the specialization in production upon which modern economies...If you want to get a full essay, order it on our website: BestEssayCheap.com

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