New Structural Financial Economics: A Framework for Rethinking the Role of Finance in Serving the Real Economy

New Structural Financial Economics challenges the conventional wisdom that developing countries should take the financial structure of developed countries as the benchmark and proposes an alternative framework for rethinking the role of finance in serving the real economy. It emphasizes the importance of examining an economy's factor endowment structure, financing needs, and government development financing to address market failures and make tailored financial regulations.

Format: Paperback / softback
Length: 72 pages
Publication date: 29 February 2024
Publisher: Cambridge University Press

This Element presents an alternative framework for reevaluating the function of finance in supporting the real economy from the perspective of New Structural Financial Economics. It challenges the prevailing notion that developing countries should emulate the financial structure of developed nations as a benchmark, contending that financial structure is inconsequential in driving long-term economic growth. As a subfield of New Structural Economics, New Structural Financial Economics adheres to three fundamental principles. Firstly, the examination of the appropriate financial structure should commence with an analysis of an economy's factor endowment structure, which identifies its inherent comparative advantage. Secondly, the determination of the appropriate financial structure is contingent upon the financing requirements of the prevailing production structure. Thirdly, a government should provide development financing to address market failures and implement tailored financial regulations that align with the unique characteristics of specific financial arrangements. Additionally, this title is also accessible as Open Access on Cambridge Core.

ISBN-13: 9781009501736