It was pointed out earlier in this book that less developed countries (LDCs) commonly have thin or even no organised financial markets (see, for example, Goldsmith 1969; McKinnon 1973; World Bank 1989). According to the mainstream view, this institutional underdevelopment is the result of the ‘long history of financial repression in developing countries’ (Fry 1989: 233). It is further assumed that financial development can be promoted by financial liberalisation, which is alleged to increase saving and therefore investment.