Emerging Capital Markets and Globalization The Latin American Experience

by Press, Stanford University; de la Torre, Augusto; Schmukler, Sergio

• ISBN13: 9780821365434
• ISBN10: 0821365436
• Format: Paperback
• Copyright: 2006-10-20
• Publisher: World Bank Publications

Summary

Back in the early 1990s, economists and policy makers had high expectations about the prospects for domestic capital market development in emerging economies, particularly in Latin America. Unfortunately, they are now faced with disheartening results. Stock and bond markets remain illiquid and segmented. Debt is concentrated at the short end of the maturity spectrum and denominated in foreign currency, exposing countries to maturity and currency risk. Capital markets in Latin America look particularly underdeveloped when considering the many efforts undertaken to improve the macroeconomic environment and to reform the institutions believed to foster capital market development. The disappointing performance has made conventional policy recommendations questionable, at best. 'Emerging Capital Markets and Globalization' analyzes where we stand and where we are heading on capital market development. First, it takes stock of the state and evolution of Latin American capital markets and related reforms over time and relative to other countries. Second, it analyzes the factors related to the development of capital markets, with particular interest on measuring the impact of reforms. And third, in light of this analysis, it discusses the prospects for capital market development in Latin America and emerging economies and the implications for the reform agenda.

Table of Contents

Foreword	xi
Acknowledgments	xv
About the Authors	xvii
Abbreviations	xviii
1 WHITHER CAPITAL MARKET DEVELOPMENT?	1	(24)
Why Does Financial Development Matter?	5	(3)
Evolution and Globalization of Capital Markets	8	(5)
Main Developments in Domestic Capital Markets	13	(2)
Factors behind the Development and Internationalization of Capital Markets	15	(4)
Policy Implications	19	(2)
Conclusions	21	(4)
2 DEVELOPMENTS IN CAPITAL MARKETS	25	(58)
The Global Context	26	(4)
Developing Countries in the Global Context	30	(13)
Developments in Domestic Capital Markets	43	(29)
Participation in International Capital Markets	72	(8)
Conclusions	80	(1)
Annex: When "Marking to Market" Becomes "Marking to Model"	81	(2)
3 FACTORS BEHIND THE DEVELOPMENT AND INTERNATIONALIZATION OF CAPITAL MARKETS	83	(56)
Factors behind Capital Market Development	85	(25)
Stock Market Internationalization	110	(19)
Domestic Capital Market Development in Latin America	129	(2)
Conclusions	131	(8)
4 WHITHER THE REFORM AGENDA?	139	(28)
What Went Wrong and What to Do Next?	144	(8)
Back to Basics	152	(10)
Final Remarks	162	(2)
Annex: Regional Capital Markets Integration A Viable Alternative?	164	(3)
Endnotes	167	(18)
References	185	(18)
Index	203