Comments on: Inclusive Finance, Shadow Banking and the Need for Financial Citizenship /2019/02/08/inclusive-finance-shadow-banking-and-the-need-for-financial-citizenship/ A Critical Perspective On Development Economics Thu, 14 Feb 2019 10:58:50 +0000 hourly 1 http://wordpress.com/ By: JUVARIA JAFRI /2019/02/08/inclusive-finance-shadow-banking-and-the-need-for-financial-citizenship/comment-page-1/#comment-1722 Thu, 14 Feb 2019 10:52:56 +0000 http://developingeconomics.org/?p=3746#comment-1722 In reply to Deborah.

Thank you for this comment which draws attention to an important issue. While I do not disagree that banks create deposits by creating loans, my research focus is on poor/ developing countries where banks are constrained in their ability to produce money because of (1) the evolutionary stage which their national banking system is currently in and (2) the peripheral/ semi-peripheral position of their economy in the financial system. For all countries (rich and poor) the departure from fractional reserve banking is captured in Victoria Chick and Sheila Dow’s exposition of the stages of banking: based on this view the UK, for instance, is at an advanced stage whereas poor countries where financial access is a policy goal are in an early stage.

If possible I will add Chick and Dow (1988) to the bibliography here to make this point clearer.

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]]> By: Deborah /2019/02/08/inclusive-finance-shadow-banking-and-the-need-for-financial-citizenship/comment-page-1/#comment-1718 Thu, 14 Feb 2019 00:41:14 +0000 http://developingeconomics.org/?p=3746#comment-1718 I am concerned about this statement, “Whereas in the past the dominant model was one in which banks relied on depositors to provide funds that could be loaned to borrowers….” ‘In the past’ when, exactly? Savings-and-loans may apply to credit unions but it doesn’t apply to high street or commercial bank lending which create loans on demand with no ‘fractional reserve’ element.

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