A Framework for Financial Market Development

By Ralph Chami, Sunil Sharma, Connel Fullenkamp

July 1, 2009

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Format: Chicago

Ralph Chami, Sunil Sharma, and Connel Fullenkamp. A Framework for Financial Market Development, (USA: International Monetary Fund, 2009) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper proposes a framework for examining the process of financial market development. The framework, consistent with the functional view of financial system design, is anchored in studying the incentives facing the key players in financial markets-borrowers, lenders, liquidity providers, and regulators-whose actions determine whether and how markets develop. While different financial instruments embody different concessions by borrowers and lenders, the framework emphasizes the two main compromises: the tradeoffs between maturity and collateral, and between seniority and control. The framework is used to analyze the sequencing of financial market development.

Subject: Bonds, Financial institutions, Financial instruments, Financial markets, Financial sector development, Securities, Securities markets

Keywords: Baltics, Bond issue, Bonds, Borrowers, Buy and hold, Commercial paper, Contracts, Covered bond, Europe, Family firm, Financial instruments, Financial market development, Financial product, Financial sector development, Lenders, Liquidity providers, New Institutional Economics, Preferred shares, Primary market, Regulators, Secondary market, Securities, Securities markets, Southeast Asia, WP

Publication Details

Pages:

58
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/156
Stock No:

WPIEA2009156
ISBN:

9781451873030
ISSN:

1018-5941

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