Vol. 2, Issue 4 (2017)
Financial development as an agent of the human development: An economic perspective and prospects of human excellence
Author(s): Shumila Cheshti
Abstract: The working of Modern economies depends largely on the finance which is the transfer of the resources from the surplus units to the deficit units. This job in an economy is carried out by its financial system. Financial system consists of the financial markets, financial intermediaries and the financial instruments. Understandably, financial system plays an indispensible role in the growth of economies as far as the growth in terms of the wealth or more specifically the growth of GDP is concerned. The shifting of the countries parameter of betterment from simple growth to the overall development has undoubtedly made the role of financial system more important but at the same time has landed more complexities to it. UNDP defined Human development as the "the process of enlarging people's choices", said choices being allowing them to "lead a long and healthy life, to be educated, to enjoy a decent standard of living", as well as "political freedom, other guaranteed human rights and various ingredients of self-respect". Financial development on the other hand is defined as the development in the size, efficiency and stability of and access to the financial system. The paper examines the relationship between the two and the ways of making it complimentary by analysing the various indices of Human development (as developed by the UNDP) and various indices of the financial development in terms of access, depth, efficiency and stability. It is observed from the study that the financial development is essential and has got a good prospect for ensuring the Human Development.