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dc.contributor.authorAddison, Tonyen_US
dc.contributor.authorChowdhury, Abdur R.en_US
dc.contributor.authorMurshed, S. Mansooben_US
dc.description.abstractFinancial development is vulnerable to social conflict. Conflict reduces the demand for domestic currency as a medium of exchange and a store of value. Conflict also leads to poor quality governance, including weak regulation of the financial system, thereby undermining the sustainability of financial institutions. Conflict therefore reduces the social return to financial liberalization and other financial-sector reforms. This paper presents a theoretical model integrating the effects of conflict and financial liberalization, and then tests the model on data for 79 countries. Using an explanatory variable that measures the intensity of conflict (from low to high) the results show that conflict significantly reduces financial development, and that this negative effect increases as conflict intensifies. The paper concludes that conflict reduction is essential if financial reform is to have its full benefit for development.en_US
dc.publisherUNU-WIDER Helsinkien_US
dc.relation.ispartofseriesWIDER Discussion Papers // World Institute for Development Economics (UNU-WIDER) 2002/48en_US
dc.subject.keywordfinancial developmenten_US
dc.subject.keywordfinancial regulationen_US
dc.subject.stwSozialer Konflikten_US
dc.titleBy how much does conflict reduce financial development?en_US
dc.typeWorking Paperen_US
Appears in Collections:WIDER Discussion Papers, United Nations University (UNU)

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