The Impact of Financial Liberalization Policies: The Case of Botswana

Abstract

Financial liberalization enables market forces to play a greater role in mobilizing resources, allocating credit, setting financial asset prices and improving financial intermediation. Many studies have claimed that these changes enhance savings, and improve efficiency of investment, which ultimately ameliorate economic growth. This paper attempts to analyse the Botswana experience, where despite having an open economy for many decades, financial liberalization was a major policy in the recent structural change. Our analysis show that, in line with the objectives of financial liberalization program in Botswana, both the level of savings and efficiency of investment, have shown some sign of improvement.