1985 | OriginalPaper | Chapter
External Financing and the Level of Development: A Conceptual Approach
Author : Robert Z. Aliber
Published in: Financing Problems of Developing Countries
Publisher: Palgrave Macmillan UK
Included in: Professional Book Archive
Activate our intelligent search to find suitable subject content or patents.
Select sections of text to find matching patents with Artificial Intelligence. powered by
Select sections of text to find additional relevant content using AI-assisted search. powered by
One of the most striking differences between the developing and the industrial countries involves the structures of their financial systems. As per capita incomes increase, financial structures expand rapidly. Thus, in the developing countries, the ratio of money to national income ranges from 10 per cent at low levels of per capita income to 30 per cent at higher levels. Similarly, the ratios of financial assets to national income and of indirect finance to direct finance are also significantly higher in the industrial countries than in the developing ones. The counterpart to a modest financial structure in countries with low levels of per capita income is extensive reliance on self-finance. Increases in these ratios, as per capita incomes increase, are associated with changes in the institutional financial structure; banks and non-bank financial intermediaries are relatively more important in the economies of the industrial countries. Moreover, the facilities for trading in various risks, including various business risks, are much more comprehensive in the industrial countries than in the developing ones.