Description
This article discusses the role of investment finance in economic development and how it differs from the conventional view. The author argues that banks have a key role in the process of investment finance and growth, and that financial markets are important in supporting financial stability.
As a result of the liberalization of the 1980s, the financial system has acquired a prominent role in developing economies. It is now conventional wisdom that financial liberalization' is the means to stimulate economic development. Investment Finance in Economic Development challenges this assumption and offers an alternative view. The book presents a post-Keynesian approach to the role of banks, financial markets and savings in economic development. It departs from the conventional belief that financial institutions are mere intermediaries between savers and investors, to show that banks have a key, active role in the process of investment finance and growth. Further, financial markets, as the loci of allocation of financial savings, are shown to have an important role in supporting financial stability during the process of growth. Review: Investment and Finance in Economic Development is an important contribution to the study of financial markets and institutions in developing economies, and constitutes a useful alternative to mainstream thinking in that field. Studart's concept of functionality is an innovative idea that, no doubt, will contribute to our further understanding of the relation. -Review of Political Economy, Vol 10 No 4, 1998
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