Rethinking Financial Deepening: Stability and Growth in Emerging Markets

The Peterson Institute held an event on June 23, 2015, to discuss the International Monetary Fund's (IMF) groundbreaking study, "Rethinking Financial Deepening: Stability and Growth in Emerging Markets." This study has drawn extensive media attention and addresses the critical issues of whether there is a point beyond which the benefits of financial development begin to decline and costs start to rise, and whether there is a right pace of financial development for emerging markets. The study develops a new comprehensive index of financial development across 128 countries to answer these questions. Ratna Sahay, deputy director of the IMF's Monetary and Capital Markets (MCM) Department, presented on the IMF's behalf. Peter Fisher, Institute board member, moderated the event and offered his comments. Institute senior fellow William R. Cline added a substantive discussion of the study's methods and results.

Sahay previously worked in the Research, Finance, Asian, European, Middle East, and Western Hemisphere departments at the IMF, leading key analytical and policy projects as well as several missions to emerging market countries, prior to becoming deputy director of the MCM department. She has published widely in leading journals on financial market spillovers and financial crises, inflation, economic growth, fiscal policy and debt sustainability, and transition economies.

Fisher is a senior fellow at the Center for Global Business and Government at the Tuck School of Business at Dartmouth, where he is also a senior lecturer. Fisher also serves as a senior director of the BlackRock Investment Institute. He is a member of the board of directors of the Peterson Institute, AIG, Inc., and of the John F. Kennedy Library Foundation. He served as under secretary of the Treasury for Domestic Finance of the US Treasury from 2001–03, and was executive vice president and manager of the System Open Market Account at the Federal Reserve Bank of New York during 1995–2001. From 2005 to 2013, he served in a number of senior roles at BlackRock, including head of Fixed Income Portfolio Management and chairman of BlackRock Asia.

Cline has been a senior fellow at the Peterson Institute since 1981. During 1996–2001 while on leave from the Institute, Cline was deputy managing director and chief economist of the Institute of International Finance (IIF) in Washington. He is the author of Financial Globalization, Economic Growth, and the Crisis of 2007–09 (PIIE, 2010), among numerous widely cited works on international finance, debt, and development.

Event Materials

Report: Rethinking Financial Deepening: Stability and Growth in Emerging Markets [pdf]
Ratna Sahay, Martin Cihák, Papa N'Diaye, Adolfo Barajas, Ran Bi, Diana Ayala, Yuan Gao, Annette Kyobe, Lam Nguyen, Christian Saborowski, Katsiaryna Svirydzenka, and Seyed Reza Yousefi
May 2015

Presentation: William R. Cline [pdf]