ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Financial Liberalisation-A Revisionist View

Financial Liberalisation A Revisionist View Deena Khatkhate Financial reform is rightly categorised not as an event but a process, constantly evolving. Two basic considerations have to be kept in mind in view in designing financial liberalisation policy strategy. For one, while financial reform is aimed at eliminating distortions in the financial markets induced by government intervention, it does not necessarily create perfect credit markets which were not perfect even before government stepped in. Financial reform has therefore to be built on the initial conditions, which make for a different profile of the reform with emphasis on its positive aspects of filling the gaps in human and information capital. Financial reform should be interpreted only as withdrawal of government intervention for economic reasons; but it is essential for prevention of breach of prudential rules for protection of investors' interests. Thus, greater the degree of financial liberalisation greater is the need for strengthening regulatory framework.

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