Importance of the Financial System Development, a bibliographic review

Abstract

The strengthening of the banking system in different Latin American countries, after critical financial crises during the 90's and at the beginning of the current decade, the consolidation of democracies and the major research and analysis concerning the relationship between financial development and economic development are key elements which have made the following topics: Access to financial services and financial deepening.

This work encompasses a bibliographic review regarding the relationship between financial development and economical development and the importance of access to and use of bank services in Latin America and Chile, in addition to its progress and difficulties still present.

The studies on the mentioned relationship date back from 1969 and have been diverse, however, evidence that the financial development results in significant economical development is accepted only at present, that is to say, functions such as: mobilization of savings, efficient allocation of resources, opportunities for exchange of goods and services, liquidity and financial deepening, contribute to economical growth. Likewise, it is stated that a higher financial deepening positively affects the economical growth, and a better access to financial services from people with lower incomes may help poverty and improve the distribution of revenues in a particular country or region.

The banking system has an important place within the financial system, especially in developing countries, the Latin America countries present desperate developments, with the Chilean banking system in a privileged position, and nevertheless, it is not exempt from difficulties and important challenges to achieve better indicators and therefore major development.