Financial systems and development

Conclusions of the Report
challenges to development. Moreover, change is
certain to encounter political opposition: people
This Report has tried to capture the essentials of benefiting from the present arrangements will rethe
complex field of finance. In at least two re- sist reform. Others-although they stand to benefit
spects it fails to do justice to the subject. First, too in the long run-will be hurt in the short run and
often the developing countries have been dis- may not choose to make the sacrifices demanded
cussed as though they were all alike, when in fact today for uncertain gains in the future. Change
policies and experience vary widely among coun- may be most resisted in the very countries where it
tries. Second, the Report has treated in a perfunc- is most necessary.
tory way the human and political dimensions of Once reform is under way, the response will not
the subject, both in discussing the origins of the be immediate; indeed, it may be painfully slow.
financial problem and in offering prescriptions for After prolonged periods of inflation and many
change.
failed attempts to control it, the public will expect
Unlike the problems of industry, those of finance inflation to continue and will behave accordingly.
are not frozen in bricks and mortar, plant and ma- Entrepreneurs unpersuaded of the permanence of
chinery. Financial claims, together with the all- new policy will be slow to change their ways.
important "rules of the game," could be rewritten This Report has tried to specify the prerequisites
overnight by government decree. But this is not to for building an efficient financial system capable of
imply that reforming a country's financial system mobilizing and allocating resources on a voluntary
can be accomplished quickly or easily. Time is basis. Such a system would continue to make misneeded
for people to acquire the necessary skills in takes and waste resources. But it would probably
accounting, management, and bank supervision. make fewer mistakes and waste fewer resources
Training staff, building new institutions, and- than the interventionist approach followed in
perhaps hardest of all-getting people to revise many developing countries today.
their expectations have proved among the greatest
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