Timing and Sequencing of Financial Sector Reforms-Evidence and Rationale

Evidence and Rationale Deena Khatkhate The success of financial liberalisation depends not so much on its intrinsic worth. which still remains unchallenged, as on how it is implemented. There is a certain order in which the various elements of financial reforms have to be introduced, In addition, a careful assessment has to be made of the state and structure of the financial system, the financial position of the borrowers, the fiscal stance of the government, the positing of the economy in the business cycle, macro-economic stability and the nature and effectiveness of the regulatory framework. These building blocks cannot be put in place all at once but in an appropriate sequential order in a mosaic of financial reform, In other words, the sequencing and timing of financial reform are critical for its success or failure.