The new structuralists' critique of financial liberalization emphasizes the role of informal credit markets in financing firms' residual credit demand in LDCs and the relevance of households' portfolio substitution patterns. The sensitivity of their policy conclusions is demonstrated in the context of a representative model developed by van Wijnbergen; the relative efficiency of intermediation in the formal and informal credit markets crucially affects the outcome of the portfolio allocation effects generated by higher bank deposit rates. An anomaly in the characterization of 'unproductive' assets in defining credit supply is also examined.