International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Anthony P. Wood

The evolution of financial systems in developing countries reflects their diverse political and economic histories. Barbados and other Caribbean countries, under colonial rule until after the Second World War, enjoyed relative financial stability but their financial systems suffered from colonial neglect. With the attainment of political independence from the United Kingdom in 1966, Barbados established its Central Bank in November, 1972. The aim of this paper is to provide a succinct account of the development of the financial system of Barbados during the perid 1966 to 1990. Both a quantitative assessment of financial development and a discussion on the institutional composition will be provided. Restricting the coverage to the period 1966-1990 allows us to assess the role of Government initiatives in shaping the institutional composition of the financial system in the immediate post-independence years. A number of highlights emerged from the analysis. First, consistent with Goldsmith (1969), as the Barbadian economy developed there was an increasing share of non-bank financial institutions in relation to the total assets of the financial system. Second, the changes in the institutional structure of the financial system have been due, in large measure, to the initiatives of Government in establishing and encouraging a wider array of institutions and instruments to broaden the scope of financial intermediation for economic development. Third, the shift in economic policy created a demand for new financial services and institutions, thereby enhancing the importance of financial intermediation.

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