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The Role of Government in East Asian Economic DevelopmentComparative Institutional Analysis$
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Masahiko Aoki, Hyung-Ki Kim, and Masahiro Okuno-Fujiwara

Print publication date: 1998

Print ISBN-13: 9780198294917

Published to Oxford Scholarship Online: January 2007

DOI: 10.1093/acprof:oso/9780198294917.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 21 June 2021

Financial Restraint: Toward a New Paradigm

Financial Restraint: Toward a New Paradigm

(p.163) 6 Financial Restraint: Toward a New Paradigm
The Role of Government in East Asian Economic Development

Thomas Hellmann

Kevin Murdock

Joseph Stiglitz (Contributor Webpage)

Oxford University Press

This chapter introduces the new concept of financial restraint: a set of financial policies that create rent opportunities in the banking and production sectors. It is argued that these rents may curtail a bank’s moral hazard behaviour and enhance incentives for monitoring and savings mobilization. Consequently, more efficient credit allocation and financial deepening are induced under financial restraint than under eitherlaissez-faireor financial repression.

Keywords:   financial policy, banking sector, production sector, rents, credit allocation

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