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1 - Introduction

Published online by Cambridge University Press:  06 July 2010

James R. Barth
Affiliation:
Auburn University, Alabama
Gerard Caprio
Affiliation:
Williams College, Massachusetts
Ross Levine
Affiliation:
Brown University, Rhode Island
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Summary

But what is government itself, but the greatest of all reflections on human nature. If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.

James Madison, Federalist Papers, Number 51

MOTIVATION

When budding entrepreneurs in Brazil, Egypt, Zambia, or Indonesia are turned down for loans or do not even bother to apply because banks instead funnel credit to the rich or politically powerful, this stymies innovation and thwarts economic growth. When households in Georgia, Nigeria, Russia, or Venezuela avoid placing their savings in financial institutions and instead buy foreign currency, physical commodities, or durable goods, this reflects queasiness about domestic banks and advertises the lack of efficient mechanisms for getting savings to productive firms. When bank managers in too many countries simply take deposits with one hand and pass them along to friends and related businesses with the other hand, this discourages business initiative and prevents the poor and unconnected with good ideas from realizing their dreams and improving their economic condition. When bad policies ignite or exacerbate banking crises in Argentina, Indonesia, or Mexico, this yields widespread bankruptcies, rising unemployment, and even soaring street violence.

Type
Chapter
Information
Rethinking Bank Regulation
Till Angels Govern
, pp. 1 - 17
Publisher: Cambridge University Press
Print publication year: 2005

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  • Introduction
  • James R. Barth, Auburn University, Alabama, Gerard Caprio, Williams College, Massachusetts, Ross Levine, Brown University, Rhode Island
  • Book: Rethinking Bank Regulation
  • Online publication: 06 July 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511753817.003
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  • Introduction
  • James R. Barth, Auburn University, Alabama, Gerard Caprio, Williams College, Massachusetts, Ross Levine, Brown University, Rhode Island
  • Book: Rethinking Bank Regulation
  • Online publication: 06 July 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511753817.003
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Introduction
  • James R. Barth, Auburn University, Alabama, Gerard Caprio, Williams College, Massachusetts, Ross Levine, Brown University, Rhode Island
  • Book: Rethinking Bank Regulation
  • Online publication: 06 July 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511753817.003
Available formats
×