The assessment concluded that the financial sector in Malawi was relatively underdeveloped and that there was need to institute measures to deepen and broaden the sector so that it should contribute more to economic growth of the country. The report also noted the financial sector to be bank-centric with very low penetration of non-bank financial products.
First, make the market function more efficiently so that risk is priced correctly. If market failures occur and consequently the price mechanism doesn’t work, public policy should look into the incentives existing for financial market participants and - if need may be - adapt the framework. Too big an appetite for risk is at the heart of subsequent financial crises.