Our experience in India has been that left to itself, the financial sector does not have a pro-equity bias. Indeed, it is even possible to argue that the financial sector does not necessarily reach out to the bottom of the pyramid. Our response to counter this bias has been to use regulation to encourage socially optimal business behaviour by financial institutions.
This is a promising avenue, but much work needs to be done. Better use of existing assets would enable countries to reduce their reliance on additional borrowing in order to finance backstops that are temporary, because linked to the very tense situation of the financial markets.