Building Stability in Latin American Financial Markets
This paper argues that the investor reluctance to make long-term commitments to Latin American financial markets results from experience. In the 1980s, while ex ante real interest rates on Latin American financial assets were usually high, ex-post real interest rates were often highly negative. In the 1990s, policymakers instituted stabilization programs and structural reforms that have improved the environment in which financial markets operate. Based on a review of experiences in the region, this paper shows that, when these opportunities are taken, investor confidence in long-term markets is strengthened.
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- Michael G. Spencer & H. J. Blommestein, 1993. "The Role of Financial Institutions in the Transition to a Market Economy," IMF Working Papers 93/75, International Monetary Fund.
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