Barbara Stallings and Roger Studart's Finance for Development is a thoughtful, thorough and precise book which adds depth to the study of finance in Latin America. It analyses the role of finance in development by looking at the links between growth and finance, and between finance and investment. The first three substantive chapters discuss financial liberalisation and crisis, the banking system, supervision of banks, and the capital markets, drawing on data from both Latin America and East Asia to illustrate the differences between these two developing regions. Chapters 6, 7 and 8 are case studies of these issues in Chile, Mexico and Brazil. The book is strongly focused on the domestic aspect of financial liberalisation and regulation, an aspect of the field which has been overlooked in Latin America given the importance of international financial flows to the trajectory of crises and recovery in Latin America.

Its primary contributions are threefold. First, it provides some nuanced answers to debates in the literature on finance and development, taking a more balanced position. One of the most interesting findings is that the relationship between ownership of banks (public vs. private) and performance is not clear cut: in Latin America, public institutions in countries where institutional quality is relatively high do not perform worse than do private institutions. This shifts the focus, when making policy recommendations about whether banks should be privatised, to the larger political economy.

Second, in its exploration of three frequently studied Latin American financial systems (Chile, Mexico and Brazil), it goes past the commonly held assumptions about them (for example, that Chile's financial system is sophisticated and benefits from a privatised pension system, Mexico is under-banked, and the Brazilian banking system is dominated by the public sector) to uncover the history, rationale and implications of these characteristics on the larger financial system, investment and growth. This is a high-quality contribution for comparativists who need more in depth information about the characteristics of these financial systems.

The third accomplishment of the book is that the more general chapters would serve as an important tool for teaching finance and development to advanced undergraduates and master's students. Chapter 2 on the liberalisation process in particular presents a balanced and thorough summation of debates about the impact of financial liberalisation on development in emerging market economies.

But despite these strengths, there are several important shortcomings. First, when faced with the book, one checks the publication date. Financial issues have gone out of fashion in the development field since the preponderance of financial crises in the 1990s has slowed down to zero. Thus one immediately questions the relevance of the questions being addressed: is it important to debate about the liberalisation of financial systems in Latin America when almost every country is highly liberalised? Does this provide new insights for regions that are at an earlier stage of financial development? The answer seems to be ‘maybe’: the authors are at pains to emphasise that both intra-regional and inter-regional differences make comparisons difficult. A related point is that the book seems slightly out of date because the data presented ends in 2002 or 2003, when many Latin American countries were still experiencing sluggish growth and the after-effects of the Argentine crisis. In contrast, the past four years have been characterised by a boom in the global economy (driven in no small part by Asia) and subsequent increased liquidity for emerging market economies, which has changed international financial dynamics substantially.

Second, the final chapter presents ‘mid-level policy recommendations’ which are neither mid-level nor genuinely actionable. Maintaining macroeconomic and political stability can hardly be called a mid-level recommendation, and though related to well functioning financial systems, policy makers are unlikely to pursue these goals in an effort to boost credit. Similarly, the institutional recommendations are too broad (more is said about this below). There are some recommendations which are more useful (revealing the authors' strengths) that have to do with suggestions on how governments can increase credit to small and medium sized enterprises and enhance access to long-term credit.

The most serious limitation of the book, however, is that the ‘innovative’ aspect of the book's argument, which is, put simply, that institutions matter, is neither new nor innovative. The authors had at their disposal an enormous amount of data, and have done less with it than they perhaps might have, had they been trying to make a more challenging argument. They rely on some relatively shallow conceptions of institutions and questionable metrics of institutional quality, leading to some awkward passages: one graph (p. 79) plots a World Bank composite index of institutional quality against Moody's Ratings and finds that they are closely related, unsurprisingly given the fact that Moody's uses these types of institutional metrics to determine their credit ratings. This weakness is particularly surprising given the authors' strong credentials as political economists. The book also on occasion poses relatively banal questions, such as whether the presence or absence of financial crises has an effect on the health of the financial system (p. 33): it is hard to imagine that the answer could have been no.

Thus, in sum, the book leaves the reader wanting more. It does not answer questions that will be relevant for a new generation of policy makers: is the recent lag in financial crises a permanent feature of this decade, century or millennium? Have Latin American countries graduated from their volatile, emerging market status? How can governments handle the political constraints to further liberalisation? To be fair, this was not the aim of the book. But one wonders whether by pushing the hypotheses a bit further, a more cutting edge book could have been written utilising the data and comparative cases the authors had at their disposal.