ECON 314 Lecture Notes - Lecture 4: Real Interest Rate, Microfinance, Household Debt
24 Jun 2019
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Document Summary
People seem to be mostly interested in payed employment instead of being entrepreneurs. Microfinance is not the only way to reduce poverty among the poor. But, it needs to be complemented with other development and poverty-alleviation policies. The 1980s financial system of most developing countries: Real interest rate on savings deposit in the negatives. Substantial capital flight (from developing countries to developed countries) As a result, certain multinational agents advocated for financial liberalization. Certain industries or sectors needed money for growth so the government stepped in to make sure they were able to take certain loans to improve growth. Financial policy and the role of the state. If the financial sector is left to operate on it"s own, it will be natural exploitative. The "public good" nature of monitoring financial institutions (information about financial institutions is itself a public good) Externalities of financial disruption (without the government, there is no incentives for the private sector to act right)
