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Capital market development : whither Latin America ?

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  • de la Torre, Augusto
  • Gozzi, Juan Carlos
  • Schmukler, Sergio L.

Abstract

Over the past decades, many countries have implemented significant reforms to foster capital market development. Latin American countries were at the forefront of this process. The authors analyze where Latin American capital markets stand after these reforms. They find that despite the intense reform effort, capital markets in Latin America remain underdeveloped relative to markets in other regions. Furthermore, stock markets are below what can be expected, given Latin America's economic and institutional fundamentals. The authors discuss alternative ways of interpreting this evidence. They argue that it is difficult to pinpoint which policies Latin American countries should pursue to overcome their poor capital market development. Moreover, they argue that expectations about the outcome of the reform process may need to be revisited to take into account intrinsic characteristics of emerging economies. The latter may limit the scope for developing deep domestic capital markets in a context of international financial integration.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4156.

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Date of creation: 01 Mar 2007
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Handle: RePEc:wbk:wbrwps:4156

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Keywords: Markets and Market Access; Economic Theory&Research; Access to Markets; Financial Economics; Financial Intermediation;

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Citations

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Cited by:
  1. de la Torre, Augusto & Gozzi, Juan Carlos & Schmukler, Sergio L., 2006. "Financial development in Latin America : big emerging issues, limited policy answers," Policy Research Working Paper Series 3963, The World Bank.
  2. Grandes, Martin & Panigo, Demian T. & Pasquini, Ricardo A., 2010. "On the estimation of the cost of equity in Latin America," Emerging Markets Review, Elsevier, Elsevier, vol. 11(4), pages 373-389, December.
  3. Dayoub, Mariam & Lasagabaster, Esperanza, 2008. "General trends in competition policy and investment regulation in mandatory defined contribution markets in Latin America," Policy Research Working Paper Series 4720, The World Bank.
  4. Christian Saborowski, 2009. "Capital Inflows and the Real Exchange Rate," IMF Working Papers 09/20, International Monetary Fund.
  5. Beck, T.H.L. & Torre, A. de la, 2007. "The basic analytics of access to financial services," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125424, Tilburg University.
  6. Thorsten Beck & Asli Demirgüç-Kunt & Patrick Honohan, 2009. "Access to Financial Services: Measurement, Impact, and Policies," World Bank Research Observer, World Bank Group, World Bank Group, vol. 24(1), pages 119-145, February.
  7. Parmendra Sharma & Eduardo Roca, 2011. "Re–Designing Financial Systems: A Review of the Role of Stock Markets in Developing Economies," Discussion Papers in Finance finance:201120, Griffith University, Department of Accounting, Finance and Economics.
  8. Myriam Quispe-Agnoli & Diego Vilán, 2008. "Financing trends in Latin America," BIS Papers chapters, Bank for International Settlements, in: Bank for International Settlements (ed.), New financing trends in Latin America: a bumpy road towards stability, volume 36, pages 15-27 Bank for International Settlements.
  9. Jamel Boukhatem, 2009. "Essai sur les déterminants empiriques de développement des marchés obligataires," EconomiX Working Papers 2009-32, University of Paris West - Nanterre la Défense, EconomiX.
  10. Anoop Singh & Martin D. Cerisola, 2006. "Sustaining Latin America's Resurgence," IMF Working Papers 06/252, International Monetary Fund.

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