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Emerging Issues in Financial Development : Lessons from Latin America

Author

Listed:
  • Tatiana Didier
  • Sergio L. Schmukler

Abstract

Since the 1990s, the financial systems in developing and developed countries have gained in soundness, depth, and diversity, prompted in part by a series of financial sector and macroeconomic reforms aimed at fostering a market-driven economy in which finance plays a central role. Latin America has been one of the regions at the forefront of these changes and offers a good laboratory of where the challenges in financial development lie. Despite all the gains in financial development, there is still a nagging contrast between the intensity of financial sector reforms implemented over the past 20 years in many countries and the actual size and depth of their financial systems. In the case of Latin America, in many respects it remains underdeveloped by international comparisons. This book studies in detail the recent history of financial sector development and reforms in Latin America, in comparison to other developing and developed countries, to shed light on the key obstacles for financial development. Rather than going in detail into sector-specific issues, the book focuses on the main architectural issues, overall perspectives, and interconnections. Its value added thus hinges on its holistic view of the development process, its broad coverage of the financial services industry (not just banking), its emphasis on comparisons and benchmarking, its systemic perspective, and its explicit effort to incorporate the lessons from the recent global financial crisis. The book is divided into three main parts. The first presents a stock taking exercise to ascertain where Latin America’s financial development lies—analyzing in more detail some of the reasons and policy implications underlying its banking depth and equity liquidity gaps. The second part revisits two themes that are central to the region’s financial development: long-term finance and the role of the state in risk bearing. The last part of the book deals with issues of regulation and supervision, first taking stock of the progress in the region and then analyzing the challenges faced by Latin America as regards three main facets of systemic oversight: macro-prudential policy, micro-systemic regulation, and systemic supervision. The chapters in this book yield many lessons and raise several issues, constituting an invaluable read for practitioners, policymakers, experts, and students alike in both developed and developing countries.

Suggested Citation

  • Tatiana Didier & Sergio L. Schmukler, 2014. "Emerging Issues in Financial Development : Lessons from Latin America," World Bank Publications, The World Bank, number 16387, January.
  • Handle: RePEc:wbk:wbpubs:16387
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    References listed on IDEAS

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    Cited by:

    1. Tatiana Didier & Sergio L Schmukler, 2014. "Debt Markets in Emerging Economies: Major Trends," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 56(2), pages 200-228, June.
    2. Noelia Cámara & David Tuesta, 2018. "Measuring financial inclusion: a multidimensional index," IFC Bulletins chapters,in: Bank for International Settlements (ed.), The role of data in supporting financial inclusion policy, volume 47 Bank for International Settlements.
    3. Catalina Granda & Franz Hamann & Cesar E. Tamayo, 2017. "Credit and Saving Constraints in General Equilibrium: Evidence from Survey Data," Borradores de Economia 1002, Banco de la Republica de Colombia.
    4. Era Dabla-Norris & Yixi Deng & Anna Ivanova & Izabela Karpowicz & Filiz D Unsal & Eva VanLeemput & Joyce Wong, 2015. "Financial Inclusion; Zooming in on Latin America," IMF Working Papers 15/206, International Monetary Fund.

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