Deposit Mobilization through Financial Restraint

By Kevin MurdockJoseph Stiglitz
1995| Working Paper No. 1354

In this paper we apply ideas to the specific issue of deposit mobilization. This issue is central to the debate on financial deepening. Mobilizing deposits is crucial in many developing countries. Domestic funds provide a cheap and reliable source of funds for development, which is of great value developing countries, especially when the economy has difficulty raising capital in international markets. Yet, in many developing countries, there is a considerable amount of savings that are not intermediated through the formal sector.