Abstract

The study aims at analysing mobilization and allocation efforts of different types of financial institutions in developing countries. Referring to the twelve countries investigated it could be shown that low interest rate ceilings as well as other policies, which resulted in financial repression, have seriously restricted savings mobilization activities. In addition, credit access problems have undermined the interest rate sensitivity of savers and helped to maintain negative real rates of interest. Finally, interest rate prescriptions have hindered financial innovations for the benefit of small savers and were a major obstacle for an extension of bank services into rural areas. Sustained improvement of the intermediation efforts of savings and credit institutions in the sample countries thus can only be achieved With more liberal interest rate policies, enhanced competition in the banking sector and by dismantling subsidized refinancing possibilities.