Long-term Finance in Latin America: A Scoreboard Model

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Peer Reviewed icon Peer Reviewed
Date issued
Aug 2016
Subject
Financial Service;
Financial System;
Financial Bond;
Housing Finance;
Taxation;
Small Business;
Long-Term Finance
JEL code
G10 - General Financial Markets: General;
G18 - Government Policy and Regulation;
G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages;
G22 - Insurance • Insurance Companies • Actuarial Studies;
G23 - Non-bank Financial Institutions • Financial Instruments • Institutional Investors;
G28 - Government Policy and Regulation
Category
Discussion Papers
Theory and empirical work have shown that long-term finance is critical for households, firms and government and for the overall development of the economy. The development of efficient and sustainable long-term financial markets, however, depends on macroeconomic stability and an effective institutional framework. Policy initiatives, including tax policy, regulation and competition policies can also improve the availability of long-term finance within these more fundamental constraints. However, country characteristics including size and demographic structure also play an important role. When comparing the provision of long-term finance across countries, it is important to take into account both structural characteristics and long-term policy constraints. A scoreboard for long-term finance in Latin America is suggested with indicators comparing different dimensions of long-term finance. Specifically, the paper suggests several indicators of the depth and inclusiveness of long-term financial markets, to be benchmarked according to country characteristics, and several policy variables, to be included in a scoreboard for long-term finance in Latin America.