## 4.1 Portfolio Maturity of Domestic Institutional Investors: The Case of Chile

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### Rationale for focusing on long-term finance
- Long-term finance can allow governments and firms to finance large long-term investments and reduce rollover risks and the potential for runs.
- Short-termism has been linked to several financial crises (Eichengreen and Hausmann, 1999; Rodrik and Velasco, 2000; Tirole, 2003; Borensztein et al., 2005; Jeanne, 2009; Brunnermeier, 2009; Raddatz, 2010; Beltratti and Stulz, 2012; Broner, Lorenzoni, and Schmukler, 2013).
- No single definition of long-term finance is adopted in the paper; examples range from maturity exceeding one year (national accounts) to five years (G-20, 2013). Long-term finance includes bank loans, bond markets, and equity.

### Trade-offs between long-term and short-term finance
- Long-term finance shifts risk to providers of funds (exposure to fluctuations in default probability, loss given default, interest rate volatility).
- Short-term finance shifts risk to users (rollover risk and interest rate risk).
- Users prefer long-term debt to reduce rollover and interest rate risks: smoothing consumption, financing housing, insuring retirement/education/health/longevity risks, enabling lumpy and large firm investments.
- Users may prefer short-term finance when returns are realized quickly, when anticipating improved creditworthiness, or when long-term finance is costly.
- Short-term financing can be used by lenders to mitigate moral hazard and agency problems; short maturities enhance monitoring (Rajan, 1992; Rey and Stiglitz, 1993; Diamond and Rajan, 2001).

### Market failures and incentive problems reducing long-term finance
- Information asymmetries: providers reluctant to extend long-term finance when borrower repayment capacity and willingness are uncertain (Stiglitz and Weiss, 1981).
- Coordination problems: poorly enforced seniority and inability of lenders to coordinate can trigger a “maturity rat race” that shortens average debt maturity (Bolton and Jeanne, 2009; Brunnermeier and Oehmke, 2013).
- Incentive problems among financial intermediaries: short-term performance evaluation of fund managers can drive short-term investment (Bebchuk and Stole, 1993; Campbell and Viceira, 2002; Opazo, Raddatz, and Schmukler, 2015). Corporate short-termism by shareholders has similar effects (Davies et al., 2014; The Economist, 2015a, 2015b).

### Banks: empirical patterns and determinants of loan maturity
- Banks transform short-term deposits into long-term loans and bear liquidity/maturity transformation risk (Diamond and Dybvig 1983).
- Cross-country bank-level data findings:
  - In high-income economies, close to a third of bank loans have maturity exceeding five years.
  - For developing economies, the share of loans with maturity larger than 5 years averages 18 percent.
  - In developing economies, half of bank loans are short-term (less than 1 year); in advanced economies the share of short-term loans averages 40 percent.
  - Share of loans with maturity between 2 and 5 years: advanced economies average 28 percent; developing economies average 32 percent.
- Syndicated loans:
  - Median and average maturity of syndicated loans in high-income economies is close to six years.
  - In middle- and low-income economies these statistics are closer to seven years.
  - Longer syndicated maturities in developing economies reflect a larger share of project finance or infrastructure loans.
- Country and bank characteristics correlated with longer bank loan maturity:
  - Low inflation, lower country risk, and stronger institutions lengthen maturity.
  - Financial sector development, enforceable seniority, collateral frameworks, and credit information environment positively correlated with longer maturities.
  - Larger banks and better-capitalized banks tend to have higher shares of long-term loans.
  - Bank ownership: wider presence of state-owned banks reduces maturity, while foreign banks are more likely to be involved in long-term lending.
  - Funding structure: banks with a higher share of long-term liabilities exhibit higher shares of long-term loans.
- Regulatory impacts:
  - Deposit insurance can reduce banks’ need to hedge runs by shortening loan maturity.
  - Basel III capital and liquidity reforms can increase regulatory capital requirements for long-term transactions, potentially dampening maturity transformation and affecting the supply of long-term finance—effects could be more severe in developing economies with fewer nonbank intermediaries.

### Capital markets: size, composition, and maturity patterns
- Capital markets are larger in advanced economies:
  - From 2000 to 2011, total capitalization (including public debt) averaged approximately 203 percent of GDP in high-income economies, almost 98 percent in upper-middle-income economies, and 62 percent in lower income economies.
  - In advanced economies, stock markets plus private bond markets average 157 percent of GDP: stock market capitalization is almost 81 percent of GDP and private bond market capitalization is close to 76 percent.
  - In upper-middle-income economies, stock market capitalization is almost 43 percent of GDP and public bond market capitalization accounts for 38 percent; private bond markets account for 17 percent.
  - In lower-income groups, private debt markets are very small at 3 percent of GDP.
- Maturity of corporate bond issues by income:
  - Average maturity: upper-middle-income economies 7.6 years; high-income economies 6.7 years; lower-middle- and low-income economies 6.3 years.
  - Shorter maturities in high-income economies partly reflect a larger percentage of bond issues by financial firms, which tend to have shorter maturities.
- Access and inclusiveness:
  - Only a few large firms use capital markets; in developing economies a smaller proportion of firms can access equity, bond, and syndicated loan markets.
  - Firms issuing in international markets face larger minimum size requirements and currency risk.
- Policy implications to deepen domestic capital markets:
  - Reduce transaction costs of issuance to expand the number of firms able to access capital markets.
  - Develop innovative instruments (for example, minibonds) and loan securitization to allow smaller and lower-rated firms access to capital markets.
  - Broaden the investor base by promoting foreign investor participation or greater access to foreign markets to expand demand and extend maturities available domestically.
  - Domestic market development can complement—not substitute—international markets.

### Institutional investors: rationale and cross-country presence
- Goal: foster long-term finance by promoting nonbank domestic institutional investors expected to have long investment horizons, capture long-term risk and illiquidity premiums, behave in a patient, countercyclical manner, and deepen long-term financial markets.
- Key statistics on institutional investor asset shares (2000–2011):
  - High-income economies: cumulative assets of institutional investors averaged 99 percent of GDP.
  - Upper-middle-income economies: assets averaged 25 percent of GDP.
  - Lower-income economies: assets averaged close to 12 percent of GDP.
  - In upper-middle-income economies pension funds predominated; in lower-income economies pension funds accounted for half of the total.
- Observation: Little evidence exists on whether institutional investors actually invest in long-term securities and how they structure their holdings. Different institutional types (pension funds, mutual funds, insurance companies) have distinct objectives, liabilities, and regulatory incentives that affect portfolio maturity.

### Portfolio maturity of domestic institutional investors: Chile evidence and mechanisms
- Purpose: analyze maturity structure differences among Chilean insurance companies, mutual funds, and pension funds and the drivers behind them.
- Finding: Chilean asset-management institutions (mutual and pension funds) hold large amounts of short-term instruments and invest shorter term relative to insurance companies.
- Exact maturity composition and averages:
  - Mutual funds and pension funds: invest more than half of their portfolios in maturities of three years or less.
  - Insurance companies: invest a little more than one-third of their portfolios in maturities of three years or less.
  - Average maturities:
    - Insurance companies: 9.77 years
    - Mutual funds: 3.97 years
    - Pension funds: 4.36 years
- Figure 4 (Average Maturity Structures of Chilean Institutional Investors, 2002-2008) reported shares:
  - Insurance companies: Up to 3 years = 34; 3-10 years = 20; Over 10 years = 45.
  - Domestic mutual funds: Up to 3 years = 60; 3-10 years = 29; Over 10 years = 11.
  - Pension fund administrators: Up to 3 years = 56; 3-10 years = 30; Over 10 years = 14.
- Mechanisms and incentives:
  - Short-termism of pension funds is not driven by scarcity of long-term instruments—asset managers choose short-term instruments even when long-term assets are widely available and held by others.
  - Open-end fund managers (e.g., pension funds) face short-run monitoring by investors, the regulator, and asset-management companies, creating incentives to avoid investments profitable at long horizons but with potential poor short-term performance.
  - Insurance companies: not open-end, receive assets that cannot be withdrawn in the short run, have long-term liabilities (defined benefit plans), face less short-run monitoring, and thus tend to hold long-term assets.
- Policy-relevant conclusion:
  - The development of large and sophisticated institutional investors alone does not guarantee increased demand for long-term assets; regulatory and market incentives shaping horizon of monitoring and compensation matter.

### International evidence on mutual funds
- Growing importance of international mutual funds, driven mainly by investors in advanced economies diversifying into developing economies.
- Finding: U.S. and U.K. mutual funds invest longer term when investing in developing economies than domestic funds do in the same economies; international mutual funds tend to invest longer term in corporate bonds than the average maturities of domestic funds in the target economies.
- Possible explanations:
  - International mutual funds may accept higher long-term risk due to larger size and ability to diversify across countries.
  - Domestic funds in developing economies may be subject to larger performance-related outflows, creating incentives to hold higher proportions of short-term instruments.
- Figure 5 (Comparison of Average Maturity of Corporate Bonds Held by U.S. and U.K. Mutual Funds and Domestic Mutual Funds, 2013) sample values:
  - Brazil: U.S. and U.K. funds = 11; Domestic funds = 12.
  - Mexico: U.S. and U.K. funds = 6; Domestic funds = 6.
  - South Africa: U.S. and U.K. funds = 3; Domestic funds = 6.
  - Australia: U.S. and U.K. funds = 6; Domestic funds = 6.
  - Hong Kong, SAR: U.S. and U.K. funds = 6; Domestic funds = 5.
  - China: U.S. and U.K. funds = 4; Domestic funds = 4.
  - Israel: U.S. and U.K. funds = 3; Domestic funds = 3.
  - New Zealand: U.S. and U.K. funds = 6; Domestic funds = 6.
  - Korea, Rep.: U.S. and U.K. funds = 6; Domestic funds = 6.
- Implication: Mutual funds from international financial centers can help extend corporate debt maturities in developing economies, but trade-offs exist.

### Role of the government in promoting long-term finance (policy options)
- Government involvement depends on the nature of obstacles (market failures, economic and institutional weaknesses) and available policy levers.
- Policy options and channels:
  - Information sharing mechanisms: creation of credit bureaus could be useful.
  - Reduce aggregate uncertainty: mitigate high political risk and macroeconomic instability that favor short-term financing.
  - Address inflation: inflation has negative effects on long-term debt.
  - Strengthen legal and institutional framework: enforce contracts, adequate collateral framework, competitive and contestable financing markets, appropriate corporate governance and accounting standards.
  - Facilitate capital market development: stock market liberalization, enforcement of insider trading laws, electronic trading systems, privatization programs, and institutional reforms associated with increases in domestic stock market capitalization and trading volumes.
  - Align incentives for institutional investors: ensure compensation and benchmarking practices have a long-run horizon to reduce focus on short-term performance.
  - Promote foreign institutional investor entry cautiously: may extend corporate debt maturities but increases susceptibility to foreign shocks and potential procyclical behavior.
  - Public-private partnerships (PPP): can support long-term finance while reducing crowding out, distributing costs over long horizons, and aligning incentives with private sector.
  - Sovereign wealth funds (SWFs): long horizon and lack of redemption risk make them suited to invest in illiquid assets with longer maturities, but they face risks of political capture and incentive misalignment.
  - Government-owned banks: can promote long-term financing but public interventions should be limited to cases where market failure is apparent and no private solution is feasible; purpose, scope, and time horizon must be clearly defined.

### Constraints, data needs, and recommended actions
- Major obstacle: shortage of international and domestic data on portfolios and institutional ownership of debt securities and bank loans.
- Recommendation: joint effort to consolidate comparable data across countries to better study financial intermediaries’ role in providing long-term finance and to guide policy steps.

_Italic: Source — wp1796 - 4.1 Portfolio Maturity of Domestic Institutional Investors: The Case of Chile_

### 4.1 Portfolio Maturity of Domestic Institutional Investors: The Case of Chile  ........................15

### 4.1 Portfolio Maturity of Domestic Institutional Investors: The Case of Chile

### Rationale for focusing on long-term finance
- Long-term finance can allow governments and firms to finance large long-term investments and reduce rollover risks and the potential for runs.
- Short-termism has been linked to several financial crises (Eichengreen and Hausmann, 1999; Rodrik and Velasco, 2000; Tirole, 2003; Borensztein et al., 2005; Jeanne, 2009; Brunnermeier, 2009; Raddatz, 2010; Beltratti and Stulz, 2012; Broner, Lorenzoni, and Schmukler, 2013).
- No single definition of long-term finance is adopted in the paper; examples range from maturity exceeding one year (national accounts) to five years (G-20, 2013). Long-term finance includes bank loans, bond markets, and equity.

### Trade-offs between long-term and short-term finance
- Long-term finance shifts risk to providers of funds (exposure to fluctuations in default probability, loss given default, interest rate volatility).
- Short-term finance shifts risk to users (rollover risk and interest rate risk).
- Users of credit prefer long-term debt to reduce rollover and interest rate risks; examples: smoothing consumption, financing housing, insuring retirement/education/health/longevity risks, enabling lumpy and large firm investments.
- Users may prefer short-term finance when returns are realized quickly, when anticipating improved creditworthiness, or when long-term finance is costly.
- Short-term financing can be used by lenders to mitigate moral hazard and agency problems; short maturities enhance monitoring (Rajan, 1992; Rey and Stiglitz, 1993; Diamond and Rajan, 2001).

### Market failures and incentive problems reducing long-term finance
- Information asymmetries: providers reluctant to extend long-term finance when borrower repayment capacity and willingness are uncertain (Stiglitz and Weiss, 1981).
- Coordination problems: poorly enforced seniority and inability of lenders to coordinate can trigger a “maturity rat race” that shortens average debt maturity (Bolton and Jeanne, 2009; Brunnermeier and Oehmke, 2013).
- Incentive problems among financial intermediaries: short-term performance evaluation of fund managers can drive short-term investment (Bebchuk and Stole, 1993; Campbell and Viceira, 2002; Opazo, Raddatz, and Schmukler, 2015). Corporate short-termism by shareholders has similar effects (Davies et al., 2014; The Economist, 2015a, 2015b).

### Banks: empirical patterns and determinants of loan maturity
- Banks are the main source of finance; they transform short-term deposits into long-term loans and bear liquidity/maturity transformation risk (Diamond and Dybvig 1983).
- Cross-country bank-level data findings:
  - In high-income economies, close to a third of bank loans have maturity exceeding five years.
  - For developing economies, the share of loans with maturity larger than 5 years averages 18 percent.
  - In developing economies, half of bank loans are short-term (less than 1 year); in advanced economies the share of short-term loans averages 40 percent.
  - Share of loans with maturity between 2 and 5 years: advanced economies average 28 percent; developing economies average 32 percent.
- Syndicated loans:
  - Median and average maturity of syndicated loans in high-income economies is close to six years.
  - In middle- and low-income economies these statistics are closer to seven years.
  - Longer syndicated maturities in developing economies reflect a larger share of project finance or infrastructure loans.
- Country and bank characteristics correlated with longer bank loan maturity:
  - Low inflation, lower country risk, and stronger institutions lengthen maturity.
  - Financial sector development, enforceable seniority, collateral frameworks, and credit information environment positively correlated with longer maturities.
  - Larger banks and better-capitalized banks tend to have higher shares of long-term loans.
  - Bank ownership: wider presence of state-owned banks reduces maturity, while foreign banks are more likely to be involved in long-term lending.
  - Funding structure: banks with a higher share of long-term liabilities exhibit higher shares of long-term loans.
- Regulatory impacts:
  - Deposit insurance can reduce banks’ need to hedge runs by shortening loan maturity.
  - Basel III capital and liquidity reforms can increase regulatory capital requirements for long-term transactions, potentially dampening maturity transformation and affecting the supply of long-term finance—effects could be more severe in developing economies with fewer nonbank intermediaries.

### Capital markets: size, composition, and maturity patterns
- Capital markets are larger in advanced economies:
  - From 2000 to 2011, total capitalization (including public debt) averaged approximately 203 percent of GDP in high-income economies, almost 98 percent in upper-middle-income economies, and 62 percent in lower income economies.
  - In advanced economies, stock markets plus private bond markets average 157 percent of GDP: stock market capitalization is almost 81 percent of GDP and private bond market capitalization is close to 76 percent.
  - In upper-middle-income economies, stock market capitalization is almost 43 percent of GDP and public bond market capitalization accounts for 38 percent; private bond markets account for 17 percent.
  - In lower-income groups, private debt markets are very small at 3 percent of GDP.
- Maturity of corporate bond issues by income:
  - Average maturity: upper-middle-income economies 7.6 years; high-income economies 6.7 years; lower-middle- and low-income economies 6.3 years.
  - Shorter maturities in high-income economies partly reflect a larger percentage of bond issues by financial firms, which tend to have shorter maturities.
- Access and inclusiveness:
  - Only a few large firms use capital markets; in developing economies a smaller proportion of firms can access equity, bond, and syndicated loan markets.
  - Firms issuing in international markets face larger minimum size requirements and currency risk.
- Policy implications to deepen domestic capital markets:
  - Reduce transaction costs of issuance to expand the number of firms able to access capital markets.
  - Develop innovative instruments (for example, minibonds) and loan securitization to allow smaller and lower-rated firms access to capital markets.
  - Broaden the investor base by promoting foreign investor participation or greater access to foreign markets to expand demand and extend maturities available domestically.
  - Domestic market development can complement—not substitute—international markets.

### Implications for developing economies and institutional investors (context for section 4.1 focus)
- The paper argues that use of long-term finance is more limited in developing economies than in advanced ones across banks, capital markets, and institutional investors.
- Banks in developing economies lend at significantly shorter maturities relative to advanced economies.
- Capital markets in developing economies are less developed and accessible only to a small proportion of firms.
- Domestic institutional investors have small participation in developing economies and face incentives that can lead them to invest short-term.
- Access to international mutual funds can provide more funds and more long-term financing, since these investors hold longer maturities compared to domestic mutual funds.
- The paper concludes with policy recommendations to address shortcomings in provision of long-term finance in developing economies.

_Italic: Source — wp1796 - 4.1 Portfolio Maturity of Domestic Institutional Investors: The Case of Chile_

### introduction of new financial instruments for investors such as explicit seniority or GDP-linked

### introduction of new financial instruments for investors such as explicit seniority or GDP-linked

### Institutional investors: rationale and cross-country presence
- Goal: foster long-term finance by promoting nonbank domestic institutional investors who are expected to have long investment horizons, capture long-term risk and illiquidity premiums, behave in a patient, countercyclical manner, and deepen long-term financial markets.
- Supporting references cited in source: Caprio and Demirgüç-Kunt 1998; Davis 1998; Davis and Steil 2001; Corbo and Schmidt-Hebbel 2003; Impavido, Musalem, and Tressel 2003; BIS 2007; Borensztein et al. 2008; Impavido, Lasagabaster, and Garcia-Huitron 2010; Della Croce, Stewart, and Yermo 2011; OECD 2013b,c, 2014; The Economist 2013, 2014; Financial Times 2015.

Key statistics on institutional investor asset shares (2000–2011):
- High-income economies: cumulative assets of institutional investors averaged 99 percent of GDP.
- Upper-middle-income economies: assets averaged 25 percent of GDP.
- Lower-income economies: assets averaged close to 12 percent of GDP.
- In upper-middle-income economies pension funds predominated; in lower-income economies pension funds accounted for half of the total.

Observations:
- Little evidence exists on whether institutional investors actually invest in long-term securities and how they structure their holdings.
- Different institutional types (pension funds, mutual funds, insurance companies) have distinct objectives, liabilities, and regulatory incentives that affect portfolio maturity.

### Portfolio maturity of domestic institutional investors: The case of Chile
- Purpose: analyze maturity structure differences among Chilean insurance companies, mutual funds, and pension funds and the drivers behind them.
- Finding: Chilean asset-management institutions (mutual and pension funds) hold large amounts of short-term instruments and invest shorter term relative to insurance companies.

Exact maturity composition and averages:
- Mutual funds and pension funds: invest more than half of their portfolios in maturities of three years or less.
- Insurance companies: invest a little more than one-third of their portfolios in maturities of three years or less.
- Average maturities:
  - Insurance companies: 9.77 years
  - Mutual funds: 3.97 years
  - Pension funds: 4.36 years

Mechanisms and incentives:
- Short-termism of pension funds is not driven by scarcity of long-term instruments—asset managers choose short-term instruments even when long-term assets are widely available and held by others.
- Open-end fund managers (e.g., pension funds) face short-run monitoring by investors, the regulator, and asset-management companies, creating incentives to avoid investments profitable at long horizons but with potential poor short-term performance.
- Insurance companies: not open-end, receive assets that cannot be withdrawn in the short run, have long-term liabilities (defined benefit plans), face less short-run monitoring, and thus tend to hold long-term assets.

Policy-relevant conclusion:
- The development of large and sophisticated institutional investors alone does not guarantee increased demand for long-term assets; regulatory and market incentives shaping horizon of monitoring and compensation matter.

### International evidence on mutual funds
- Trend: growing importance of international mutual funds, driven mainly by investors in advanced economies diversifying into developing economies (including through dedicated emerging markets funds and globally active funds).
- Finding: U.S. and U.K. mutual funds invest longer term when investing in developing economies than domestic funds do in the same economies.
  - Specifically, international mutual funds tend to invest longer term in corporate bonds than the average maturities of domestic funds in the target economies.
- Possible explanations:
  - International mutual funds may accept higher long-term risk due to larger size and ability to diversify across countries.
  - Domestic funds in developing economies may be subject to larger performance-related outflows, creating incentives to hold higher proportions of short-term instruments.

Implication:
- Mutual funds from international financial centers can help extend corporate debt maturities in developing economies, but trade-offs exist (see government role section).

### Role of the government in promoting long-term finance
- Government involvement depends on the nature of obstacles (market failures, economic and institutional weaknesses) and available policy levers.
- Policy options and channels:
  - Information sharing mechanisms: creation of credit bureaus could be useful.
  - Reduce aggregate uncertainty: mitigate high political risk and macroeconomic instability that favor short-term financing.
  - Address inflation: inflation has negative effects on long-term debt.
  - Strengthen legal and institutional framework: enforce contracts, adequate collateral framework, competitive and contestable financing markets, appropriate corporate governance and accounting standards.
  - Facilitate capital market development: stock market liberalization, enforcement of insider trading laws, electronic trading systems, privatization programs, and institutional reforms have been associated with increases in domestic stock market capitalization and trading volumes (but pass-through to long-term funds is not well known).
  - Align incentives for institutional investors: ensure compensation and benchmarking practices have a long-run horizon to reduce focus on short-term performance.
  - Promote foreign institutional investor entry cautiously: may extend corporate debt maturities but increases susceptibility to foreign shocks and potential procyclical behavior.
  - Public-private partnerships (PPP): can support long-term finance while reducing crowding out, distributing costs over long horizons, and aligning incentives with private sector.
  - Sovereign wealth funds (SWFs): long horizon and lack of redemption risk make them suited to invest in illiquid assets with longer maturities, but they face risks of political capture and incentive misalignment.
  - Government-owned banks: can promote long-term financing but public interventions should be limited to cases where market failure is apparent and no private solution is feasible; purpose, scope, and time horizon must be clearly defined.

Constraints and data needs:
- Major obstacle: shortage of international and domestic data on portfolios and institutional ownership of debt securities and bank loans.
- Recommendation: joint effort to consolidate comparable data across countries to better study financial intermediaries’ role in providing long-term finance and to guide policy steps.

*Source: wp1796 - introduction of new financial instruments for investors such as explicit seniority or GDP-linked*

### References

### References and Figures (wp1796 - References)

### Major themes in the cited literature
- Determinants and effects of debt maturity, short-termism, and liquidity risk (e.g., Diamond 1991; Brunnermeier 2009; Brunnermeier and Oehmke 2013; Jeanne 2009).
- Role of institutional investors, pension funds, and sovereign wealth funds in long-term investment finance (e.g., Campbell and Viceira 2002; Della Croce, Stewart, and Yermo 2011; Gelb et al. 2014; World Bank 2015).
- Bank lending behavior and composition of loan portfolios across countries and regions (e.g., Chernykh and Theodossiou 2011; De Haas, Ferreira, and Taci 2010; Constant and Ngomsi 2012).
- Sovereign debt structure, seniority, and crisis prevention (e.g., Bolton and Jeanne 2009; Borensztein et al. 2005).
- Financial development, credit information, and access to finance for firms (e.g., Aghion, Howitt, and Mayer 2005; Demirgüç-Kunt and Maksimovic 1996; Martinez Pería and Singh 2014).
- Interaction of global liquidity, capital flows, and emerging economies’ vulnerabilities (e.g., Shin 2013; Rodrik and Velasco 2000; Gelos 2011).
- Governance and mandates of state financial institutions and pension funds (e.g., Scott 2007; Rudolph 2009; Impavido, Lasagabaster, and Garcia-Huitron 2010).
- Empirical analyses of corporate borrowing maturity, bond and loan markets, and international capital market use (e.g., Cortina-Lorente, Brandao, and Schmukler 2016; Gozzi et al. 2015).

### Key figures and exact statistics reported
- Figure 1. Average Share of Bank Loans in Advanced and Developing Economies by Maturity, 2005–12 (Source: World Bank 2015)
  - Advanced economies: Up to 1 year = 32; 2-5 years = 31; Over 5 years = 37 (implied from remaining share; original image labels list 32, 31, 37 percentages across bars).
  - Developing economies: Up to 1 year = 50; 2-5 years = 28; Over 5 years = 22 (represented as 50, 28, 22 in figure bars).
  - Chart axis: Share of total loans, %; categories: Up to 1 year, 2-5 years, Over 5 years.

- Figure 2. Capital Market Size and Composition by Country Income Group, 2000–11 (Source: World Bank 2015)
  - Lower-middle- & low-income: Stock market capitalization = 26; Private debt = 3; Public debt = 17 (% of GDP values shown as 26, 3, 17).
  - Upper-middle-income: Stock market capitalization = 43; Private debt = 17; Public debt = 76 (% of GDP values shown as 43, 17, 76).
  - High-income: Stock market capitalization = 81; Private debt = 76; Public debt = 203 (% of GDP values shown as 81, 76, 203).
  - Chart units: % of GDP.

- Figure 3. Institutional Investor Assets by Country Income Group, 2000–11 (Source: World Bank 2015)
  - Lower-middle- & low-income: Mutual funds = 3; Insurance = 6; Pension funds = 36 (% of GDP values shown as 3, 6, 36).
  - Upper-middle-income: Mutual funds = 3; Insurance = 7; Pension funds = 35 (% of GDP values shown as 3, 7, 35).
  - High-income: Mutual funds = 6; Insurance = 12; Pension funds = 29 (% of GDP values shown as 6, 12, 29).
  - Chart units: % of GDP.

- Figure 4. Average Maturity Structures of Chilean Institutional Investors, 2002-2008 (Source: Opazo, Raddatz, and Schmukler 2015)
  - Insurance companies: Up to 3 years = 34; 3-10 years = 20; Over 10 years = 45 (percent shares shown as 34, 20, 45).
  - Domestic mutual funds: Up to 3 years = 60; 3-10 years = 29; Over 10 years = 11 (percent shares shown as 60, 29, 11).
  - Pension fund administrators: Up to 3 years = 56; 3-10 years = 30; Over 10 years = 14 (percent shares shown as 56, 30, 14).
  - Chart units: Share of total portfolio, %.

- Figure 5. Comparison of Average Maturity of Corporate Bonds Held by U.S. and U.K. Mutual Funds and Domestic Mutual Funds, 2013 (Source: World Bank 2015)
  - Average maturity in years (examples shown):
    - Brazil: U.S. and U.K. funds = 11; Domestic funds = 12.
    - Mexico: U.S. and U.K. funds = 6; Domestic funds = 6.
    - South Africa: U.S. and U.K. funds = 3; Domestic funds = 6.
    - Australia: U.S. and U.K. funds = 6; Domestic funds = 6.
    - Hong Kong, SAR: U.S. and U.K. funds = 6; Domestic funds = 5.
    - China: U.S. and U.K. funds = 4; Domestic funds = 4.
    - Israel: U.S. and U.K. funds = 3; Domestic funds = 3.
    - New Zealand: U.S. and U.K. funds = 6; Domestic funds = 6.
    - Korea, Rep.: U.S. and U.K. funds = 6; Domestic funds = 6.
  - Chart comparison: Developing economies versus Advanced economies; units = Average maturity in years.

### Observations implied by references and figures
- The literature emphasizes the interplay between financial structure (debt maturity, bank vs. capital markets) and macro- and microeconomic outcomes (growth, firm financing, crisis vulnerability).
- Cross-country evidence in figures highlights substantial differences in loan maturity distribution and the size and composition of capital markets and institutional investor assets across income groups.
- Chilean data (Figure 4) show pension funds hold a larger share of longer-maturity assets compared with insurance companies and domestic mutual funds.
- Comparison of mutual fund holdings (Figure 5) indicates variation in average bond maturities across countries and fund domiciles, with several cases where domestic funds hold maturities similar to or longer than U.S. and U.K. funds.

*Source: References and figures compilation (wp1796 - References).*

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_Source: https://www.imf.org/-/media/files/publications/wp/2017/wp1796.pdf_