Description: The importance of the financial sector in facilitating the transfer of resources from savers to investors is widely acknowledged. Efficient financial systems facilitate better mobilization and use of resources, which accelerate the process of economic growth. It is a widely held belief that a more liberalized financial system which relies on market forces, free entry, and a wide array of financial instruments is better able to carry out this function than an interventionist system which relies on directed credit and restricted entry, and provides a limited number of financial instruments. Nevertheless, experience shows that rapid economic growth and capital accumulation can be achieved with financial systems that are interventionist, and that there are a variety of factors which affect the success of financial liberalization. Major differences of opinion continue on the role of financial sector regulation and reforms in the process of development. With a view to assessing the extent and pace of financial sector deregulation and to examining the institutional framework necessary for the development of the financial sector, the Asian Development Bank undertook a study of the financial sector in its member countries. The countries chosen for detailed study included two from the newly industrialized economies (NIEs), namely Republic of Korea and Taipei, China, three from Southeast Asia, namely Indonesia, Philippines, and Thailand, and two from South Asia, namely India and Pakistan. Besides the country studies, three regional reports, one each for South Asia, Southeast Asia, and the NIEs were prepared. There was also a special paper on the financial sector experience of post-war Japan. Anoverall synthesis report analyzing and comparing the financial sector experiences of the seven countries completed the output of the study.

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