Financial Development in Asia: some analytical issues

Twenty‐two years ago, Ronald McKinnon and Edward Shaw highlighted some of the deleterious effects of financial repression‐interest rate ceilings, high reserve requirements, directed credit policies, and discriminatory taxation of financial intermediaries. Both books presented some theoretical underpinnings for policy recommendations, based in large part on reforms in Taiwan (early 1950s) and Korea (mid‐l960s), that were already in vogue. Since 1973 there has been a literature explosion in the field of financial development, much of it focused on the Asian experience. This article constitutes the third in a series of articles which surveys the literature on financial development in Asia for the period 1988–94.