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Financial sector strategies and financial sector outcomes: Do the strategies perform?

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  • Melecky, Martin
  • Podpiera, Anca Maria

Abstract

Financial sector strategies enable financial policymakers and stakeholders to take a holistic view at the financial development needs in their country and to formulate balanced financial policies. They help policymakers consider the systemic risk that different development policies involve and choose an informed way forward. We construct a new dataset of historical financial sector strategies covering 150 countries over the period 1985–2014, and assess the strategies using the rating criteria proposed by Maimbo and Melecky (2014). We then investigate how the quality of the strategies can affect financial sector outcomes such as financial depth, inclusion, efficiency and stability. We find that the use of financial sector strategies helped increase financial sector deepening, inclusion and stability, and that this impact could be greater for higher quality strategies. One way how financial sector strategies can improve financial sector outcomes is by improving the regulatory framework for finance. A significant relationship between the use of strategies and the efficiency of banks is not confirmed.

Suggested Citation

  • Melecky, Martin & Podpiera, Anca Maria, 2020. "Financial sector strategies and financial sector outcomes: Do the strategies perform?," Economic Systems, Elsevier, vol. 44(2).
    • Handle: RePEc:eee:ecosys:v:44:y:2020:i:2:s0939362518304837
    DOI: 10.1016/j.ecosys.2020.100757
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    More about this item

    Keywords

    Financial sector strategies; Financial depth; Stability; Efficiency; Inclusion; Policy coordination; Policy tradeoffs;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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