01671cas a2200241 a 4500 AALejournalIMF003945 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451862867 1018-5941 BD-DhAAL BD-DhAAL Hauner, David. Fiscal Policy and Financial Development / David Hauner. Washington, D.C. : International Monetary Fund, 2006. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We examine the effects of public sector borrowing from the domestic banking system on financial development in middle-income countries. While these countries' external debt has been falling, the share of bank credit absorbed by the public sector has been rising rapidly. We argue that this runs the risk of slowing financial development by affecting structural characteristics of the banking systems. We find empirical evidence that too much public sector borrowing harms financial deepening, and that banks mainly lending to the public sector tend to be more profitable but less efficient. We note that these effects add to the costs of fiscal prolificacy. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2006/026 Full text available on IMF http://elibrary.imf.org/view/journals/001/2006/026/001.2006.issue-026-en.xml IMF e-Library