Financial Development in Latin America and the Caribbean

Augusto De La Torre, Alain Ize, Sergio L. Schmukler

Description

During the 1980s and 1990s, financial sectors were the
Achilles’ heel of economic development in Latin America
and the Caribbean (LAC). Since then, these sectors have
grown and deepened, becoming more integrated and competitive,
with new actors, markets, and instruments springing up and financial
inclusion broadening. To crown these achievements, the
During the 1980s and 1990s, financial sectors were the Achilles’ heel of economic development in Latin America
and the Caribbean (LAC). Since then, these sectors have grown and deepened, becoming more integrated and competitive,
with new actors, markets, and instruments springing up and financial inclusion broadening. To crown these achievements, the
region’s financial systems were left largely unscathed by the global financial crisis of 2008–09. Now that the successes of LAC’s macrofinancial stability are widely recognized and tested, it is high time for an in-depth stocktaking of what remains to be done.
Financial Development in Latin America and the Caribbean: The Road Ahead provides both a stocktaking and a forward-looking
assessment of the region’s financial development. Rather than going into detail about sector-specific issues, the report focuses on the main architectural issues, overall perspectives, and interconnections. The report’s value added thus hinges on its holistic view of the development process, its broad coverage of the financial services industry beyond banking, its emphasis on benchmarking, its systemic perspective, and its explicit effort to incorporate the lessons from the recent global financial crisis. Financial Development in Latin America and the Caribbean: The Road Ahead builds on and complements several overview studies on financial development in both LAC countries and the developing world that were published in the past decade. It will be of interest to policy makers and financial analysts interested in improving the financial sector in the LAC region.

Informations

• Publié par: world-bank-publications
• Publié le: 30 novembre 2011
• Nombre de lectures: 12
• EAN13: 9780821389362
• Langue: English
• Poids de l'ouvrage: 8 Mo

Extrait

WORLD BANK LATIN AMERICAN
AND CARIBBEAN STUDIES
Financial Development
in Latin America and
the Caribbean
THE ROAD AHEAD
Augusto de la Torre
Alain Ize
Sergio L. Schmukler FINANCIAL DEVELOPMENT IN LATIN AMERICA AND THE CARIBBEAN i
Financial Development in
Latin America and the Caribbean FINANCIAL DEVELOPMENT IN LATIN AMERICA AND THE CARIBBEAN iii
Financial Development
in Latin America and
the Caribbean
The Road Ahead
By a team led by Augusto de la Torre,
Alain Ize, and Sergio L. Schmukler© 2012 International Bank for Reconstruction and Development / International Development
Association or The World Bank
1818 H Street NW
Washington DC 20433
Telephone: [phone]
Internet: www.worldbank.org
1 2 3 4 15 14 13 12
This volume is a product of the staff of The World Bank with external contributions. The fi ndings,
interpretations, and conclusions expressed in this volume do not necessarily refl ect the views of The
World Bank, its Board of Executive Directors, or the governments they represent.
The World Bank does not guarantee the accuracy of the data included in this work. The boundaries,
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ment on the part of The World Bank concerning the legal status of any territory or the endorsement or
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ISBN: 978-0-8213-8847-1
eISBN: 978-0-8213-8936-2
DOI: 10.1596/978-0-8213-8847-1
Library of Congress Cataloging-in-Publication data have been requested.
Cover design: Naylor Design, Inc.
Cover photo: SVLuma and Ash Design/Shutterstock.comContents
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv
1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The conventional view on fi nancial development and its limitations . . . . . . . . . . . . . . . . . . 2
Revisiting financial development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Where is LAC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Promoting the bright side . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Dealing with the dark side . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2 Financial Development: Bright Side, Patterns, Paths, and Dark Side . . . . . . . . . . . . . . . . . 15
The bright side . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The dark side . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Can there be too much fi nance? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Notes. . . . . 26
3 Domestic Financial Development: Where Does LAC Stand? . . . . . . . . . . . . . . . . . . . . . . . 29
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Main fi ndings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Bond markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Equity markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
The new players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
vvi CONTENTS
Alternative markets and products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
4 Financial Globalization: Where Does LAC Stand? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
The two dimensions of fi nancial globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Financial diversifi cation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Financial offshoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Notes. . . . . 76
5 Financial Inclusion: Where Does LAC Stand? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Supply-side evidence . 78
Demand-side evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
The role of government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
6 The Banking Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Is the banking gap real? 96
Supply or demand? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Are these the ghosts of a turbulent past? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Where is LAC now? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Notes. . . . 106
7 The Equity Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Effects of globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Free fl oat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Market concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Institutional investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Corporate governance 114
Other factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
8 Going Long . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
What are the issues? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
What are the options? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Where is LAC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
What are the key policy challenges? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Notes. . . . 136
9 Risk Bearing by the State: A Collective Action Perspective . . . . . . . . . . . . . . . . . . . . . . . 141
The role of the state