bilig-21/ Spring 2002

FINANCIAL OPENNESS IN DEVELOPING COUNTRIES AND THE SCOPE OF FINANCIAL LIBERALIZATION IN KAZAKHSTAN

Yessengali OSKENBAYEV
Ahmet Yesevi University Research Assistant

In this paper I will try to analyse the consequences of financial liberalization programmes held in Developing Countries. Indeed these countries have moved towards liberalization of their finacial systems. Countries eased or lifted bank interest rate ceilings, lowered compulsory reserve requirements and entry barriers, reduced government interference in credit allocation decisions, and privatized banks and insurance companies. Some countries actively promoted the development of local stock markets and encouraged entry of foreign financial intermediaries. Financial Liberalization(FL) programme held in these countries from the beginning of 80`s had adverse macroeconomic effects and was painful. Namely, financial liberalization programme led to an increase in non-productive profit-seeking activities that ended up with financial crises. The more recent Turkish and Mexican crises of 1994, and the ongoing Asian crises that started in summer 1997 can be the main examples of such a development. It is known that many Former Socialist Countries have undertaken liberalization programmes. That is why an adequate understanding of the consequences of FL programme is needed by these countries.

Key Words : Financial liberalization, financial crisis, Kazakhstan, finacial liberalization in Kazakhstan.