PRODUCTIVITY AND FINANCIAL SECTOR POLICIES - EVIDENCE FROM SOUTH EAST-ASIA

This paper uses primary data collected from the Central Bank reports t o examine the influence of financial sector policies on the average pr oductivity of capital in five South East Asian economies. The data inc lude measures of 'repressionist' policies encompassing interest rate c ontrols, directed credit programmes and reserve and liquidity requirem ents. We use time series techniques to examine whether these policies have a statistically significant influence on the average productivity of capital, conditioning on variables suggested by economic theory. T hese policies are found to have a significant negative effect on produ ctivity in most cases with the important exception of South Korea, for which we find significant positive effects. (C) 1998 Elsevier Science B.V.