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Emerging Market Financing. Potential and Risks Illustrated with a Study of Mexico

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  • Maria Scattaglia
  • Alfred Steinherr

Abstract

[eng] Emerging Market Financing. Potential and Risks Illustrated with a Study of Mexico. . Financial crises in the 1990s are different from those that occurred previously. First, private investors play a more important role. Second, spill-over effects to other countries are more pronounced and have become a primary source of concern.. This study shows that the Mexican crisis was a speculative "bubble". Equity valuations were such that the required growth of expected earnings was far beyond any historic reference value. Combined with the external disequilibria, there was, thus, grounds for expecting the bubble to burst. [fre] Les flux de capitaux vers les marches emergents : étude du cas mexicain. . Les crises financières des années quatre-vingt-dix sont fort différentes des crises précédentes pour deux raisons. Premièrement, les investisseurs privés ont désormais un rôle prépondérant en matière de prêts de fonds. Deuxièmement, les risques de contagion entre marchés régionaux se sont considérablement accrus. Cette étude montre que la crise mexicaine avait la nature d'une «bulle» spécula­tive. Le taux de croissance espéré des profits implicite dans le prix des actions était déconnecté de la réalité. De surcroît, le potentiel de diversification des actifs financiers mexicains est faible pour un investisseur américain. Compte tenu du déséquilibre extérieur, on pouvait donc s'attendre à partir de 1993 à un éclatement de la bulle.

Suggested Citation

  • Maria Scattaglia & Alfred Steinherr, 1998. "Emerging Market Financing. Potential and Risks Illustrated with a Study of Mexico," Revue Économique, Programme National Persée, vol. 49(1), pages 87-102.
    • Handle: RePEc:prs:reveco:reco_0035-2764_1998_num_49_1_409965
    DOI: 10.3406/reco.1998.409965
    Note: DOI:10.3406/reco.1998.409965
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    References listed on IDEAS

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    1. Rudiger Dornbusch & Alejandro Werner, 1994. "Mexico: Stabilization, Reform, and No Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 253-316.
    2. Stijn Claessens & Moon-Whoan Rhee, 1994. "The Effect of Barriers to Equity Investment in Developing Countries," NBER Chapters, in: The Internationalization of Equity Markets, pages 231-275, National Bureau of Economic Research, Inc.
    3. Calvo, Sara & Reinhart, Carmen, 1996. "Capital flows to Latin America : Is there evidence of contagion effects?," Policy Research Working Paper Series 1619, The World Bank.
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