Financial Sector Reforms

CHAPTER ONE

INTRODUCTION

1.1BACKGROUND

Shaw (1973) posits that distortions of pecuniary prices, including interest place and foreign exchange rates reduce the real rate of fruit and the size of the financial system relative to the non-financial magnitudes. In all cases this strategy has stop or gravely retarded the development process. The stunted growth of several developing economies including Ghanas is part of the evidence, which retain credence to this assertion.

Coming to terms with this fact, many developing countries, in the 1980s refractory to reconsider their financial approach to development. Although countries resist in the scale of government intervention and the extent to which they consume already stabilized and structured their economies, most have decided to rely more upon the private sector and market signals to transmit the allocation of resources. To obtain all the benefits of a greater assent on voluntary, market-based decision-making, they need efficient financial systems.

A financial system provides services that atomic number 18 essential in a modern economic system. The use of a stable widely evaluate medium of exchange reduces the costs of transactions. It facilitates trade and therefore, specialization in production.





Financial assets with attractive yield, liquidity, and risk characteristics, encourage saving in financial forms. By evaluating alternative investments and monitoring the activities of borrowers, financial intermediaries join on the efficiency of resource use. Access to a variety of financial instruments enables economic agents to pool, price, and exchange risk. Trade, the efficient use of resources, saving, and risk taking, are the corner stones of a growing economy.

Financial services puddle it cheaper and less risky to trade goods and services and to borrow and lend. Without them, an economy would be confined to self-sufficiency or barter, which would inhibit the specialization in production upon which modern economies...If you want to get a full essay, order it on our website: Orderessay



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