Back in the 1990s, many emerging countries opted for more or less stringent systems of fixed exchange rates (crawling pegs, hard pegs, currency boards), generally in the hope that such systems would help to get rid of perennial high inflation, bolster international policy credibility, and provide a strong basis for increased foreign investment flows.
Much work has been done on how financial intermediaries and financial markets facilitate investment by firms and, hence, promote economic growth. 5 Financial intermediaries and financial markets are generally thought to reduce information asymmetry problems that can make raising external funds difficult and expensive for firms.