Financial Reform Since The Period Of Pinochet's Chile Study

Various developing countries have implemented financial reform since 1970s, and among which Chile could be regarded as one of the most successful countries. Therefore, it will be beneficial for the financial reforms and developments of developing countries to study and summarize the experience of the Chilean financial reform.Basing on the literature related to financial deepening theory and Chilean financial reform, this dissertation divides the Chilean financial reform since 1970s into two periods and three phases. The two periods are: the 1974-1990 period of Pinochet's military regime and the post-1990 period of democratic government, and the three phases are: the phase of radical financial liberalization (1974-1984), the phase of financial restraint focused on prudential regulation (1985-1990), and the phase of internal financial restraint combined with moderate external deregulation (from 1990 till now).The perspective of this dissertation is that the radical financial liberalization of the first phase had not succeeded, which resulted in the banking crisis of 1982; however, the financial restraint and the moderate financial liberalization in the second and third phases have achieved, which formed a benign cycle between gradual financial deepening and substantial economic growth.The structure of this dissertation is as follows. Chapter 1 analyzes the background, policies and effects of financial reform in the Pinochet period. Chapter 2 also describes the background, policies and effects of financial reform in the democracy period, and then examines the performance of Chilean financial system from the end of 1990s till now in terms of macro finance, banking sector and stock market. Chapter 3 elaborates on the Chilean financial developments since 1970s in terms of macro financial sector, banking sector, capital market, non-banking financial institution and financial structure. Furthermore, there are five analytical conclusions as follows: (1) the financial reform should conform to the appropriate order; (2) the financial reform should be associated with the reforms of other economic sectors; (3) the government should improve the legal framework and enhance the financial regulation; (4) the government should maintain a steady political and social environment and keep the certainty and consistency of policies; (5) the government should develop the domestic capital market by taking measures suitable to local conditions.