Intersectoral financial flows in developing countries are used to
show that business is more flexible than the household in its response
to financial market conditions. Changes in the flow of funds from the
foreign and government sector cause at most a small response in flow
from the household sector compared with the response from the business
sector. Swings in the availability of foreign finance or in the
government's surplus are absorbed entirely by the business sector,
with household coming forward with little if any additional savings.