Financial Markets and the Behavior of Private Savings in Latin America
AbstractThis paper complements previous studies by arguing that the low private savings ratio in Latin America can be associated with the limited confidence of households and businesses in domestic financial institutions. Previous studies have established a relationship between private savings and financial markets either by using a measure of `financial depth` or a measure of `borrowing constraints. ` This paper offers an alternative view by claiming that the private savings rate relates positively to the confidence of the private sector in the strength of the financial system and that the latter concept can be approximated by the ratio of corporate demand for bank liquid assets. Latin American countries have lower private savings rates than other developing and most industrial countries. They also display the highest corporate to household bank deposit ratios among the three groups of countries considered here. Further, the ratio of corporate to household deposit holdings is strongly correlated with other indicators of banking system fragility.
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Bibliographic InfoPaper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4058.
Date of creation: Feb 1997
Date of revision:
Other versions of this item:
- Liliana Rojas-Suárez & Steven R. Weisbrod, 1997. "Financial Markets and the Behavior of Private Savings in Latin America," IDB Publications 6423, Inter-American Development Bank.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jappelli, Tullio & Pagano, Marco, 1992.
"Saving, Growth and Liquidity Constraints,"
CEPR Discussion Papers
662, C.E.P.R. Discussion Papers.
- Sebastian Edwards, 1995. "Why are Saving Rates so Different Across Countries?: An International Comparative Analysis," NBER Working Papers 5097, National Bureau of Economic Research, Inc.
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