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Building a Modern Financial System: The Indonesian Experience
This book provides penetrating insights into the kinds of policies that can lead to the development of a modern financial system in a large. relatively underdeveloped country. The study covers all facets of the financial system. emphasizing the role of the monetary authorities. the transition from a gov-emment-dominated to a predominantly private banking system. and the recent rapid expansion of the capital market.
Indonesia is a particularly interesting case because its economy and its financial system were in shambles in the mid-1960s owing to political adventurism and economic mismanagement. Over the next three decades. sensible macroeconomic policies and growth-promoting reforms in both the real and financial sectors produced high rates of economic growth. balanced expansion of agriculture and industry. and an increasingly vibrant. market-oriented financial system.
The authors. who served as advisors to the Indonesian Government. are well placed to provide a unique insider account of this story. They describe not only the policies adopted and their consequences for financial develop-ment. but also many of the alternatives that were considered and rejected and the major underlying political forces that shaped financial policymaking.
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