It is important to note that the number and frequency of bank failures in the world have increased rapidly in recent years. These failures have occurred both in countries which followed relatively more open policies as well as the ones exercising control in different degrees.
Recent experiences in East Asia and elsewhere have brought to fore the criticality of a financial system’s stability for ensuring sustainability of openness in invigorating economic growth. In one important sense it also marks a departure from the excessive emphasis laid on the proposition that financial liberalisation per se will lead to higher growth.