Two concepts of financial development (and two different measures)
I think the crisis points to important lessons from the finance and growth literature for banking sector reform: focus again on the intermediation growth-enhancing functions and reshape regulatory policies so that negative externalities are internalized by financial institutions. One final important point is that one size does not fit all. Additional financial deepening might not have much of an impact in high income countries, but it is critical for economic growth and poverty alleviation in many developing countries.
Thorsten Beck, CentER and European Banking Center, Tilburg University
Note: This comment is partly based on on-going research with Hans Degryse and Christiane Kneer, both at Tilburg University.
Beck, Thorsten, Robert Cull, and Afeikhena Jerome. 2005. “Bank Privatization and Performance: Empirical Evidence from
Beck, Thorsten, Berrak Buyukkarabacak, Felix Rioja and Neven Valev. 2009. “Who Gets the Credit? And Does it Matter? Household vs. Firm Lending Across Countries” CentER Discussion Paper, Tilburg University