ABSTRACT
Over the past two decades, the financial services industry in most advanced industrial countries has been subject to dramatic and multiple transformations. These revolutionary changes, which resulted in a more competitive financial environment, have produced substantial public benefits. Unfortunately, the highly managed financial systems in most developing countries have, in one way or another, restricted effective growth patterns and processes in these economies. There are, however, several ways in which underdeveloped countries can improve the contribution of their financial sectors to economic development to income distribution. This article discusses some of these methods, and ends by arguing that financial reform is a key element in expanding the productive capacity of developing countries.
