| Abstract: |
The paper documents the major trends in financial development in Latin America
and the Caribbean since the early 1990s. The paper compares trends in Latin
America and the Caribbean with those in Asia, Eastern Europe, and advanced
countries and compares countries within Latin America and the Caribbean. The
findings show that financial systems in the Latin America and the Caribbean
region have become more diversified and more complex. In particular, domestic
financial systems have become less bank-based, with bond and stock markets
playing a larger role; institutional investors have gained some space in
channeling domestic savings, thus increasing the availability of funds for
investment in capital markets; and several economies in the region have
started to reduce currency and maturity mismatches. Nonetheless, a few large
companies continue to capture most of the domestic savings. And because these
trends have unfolded more slowly than pro-market reformers had envisioned,
broad, market-based financial systems with dispersed ownership have yet to
materialize fully in the region. As a result, convergence is still largely
failing to happen and the region's financial systems remain less developed
than those of the advanced economies and several other emerging economies,
most notably those in Asia. |