| Abstract | Recent economic theory suggests the development of financial markets can promote economic growth and there is some empirical support for this. In Hong Kong, financial market development has taken the form of expanding the bond market, establishing new institutions, improving supervision and creating monetary policy instruments. This appears to have led to a sounder and more efficient financial system. The first section of this paper summaries the economic literature on financial market development and the extent to which empirical evidence supports its conclusions. The four subsequent sections examine financial market reforms in Hong Kong - expanding the bond market, establishing new institutions, improving supervision and creating monetary policy instruments - and discusses how they contribute to these three goals. |
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