Advancing Financial Development in Latin America and the Caribbean
IMF Working Papers, April 7, 2016
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- Advancing Financial Development in Latin America and the Caribbean
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Bibliographic details
- Authors: Dyna Heng, Anna Ivanova, Rodrigo Mariscal, Uma Ramakrishnan, Joyce Wong
- Published: April 7, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484321713.001
Summary
- Paper examines the state of financial development in the Latin America and Caribbean (LAC) region and potential growth and stability implications from further development.
- Access to financial institutions has expanded notably in the past decade.
- The region compares favorably with other emerging market regions on access to financial institutions.
- The region continues to lag behind peers on broader financial development, especially with respect to markets.
- There is substantial heterogeneity across countries in the region.
- Financial systems in many LAC countries are underdeveloped relative to their macroeconomic fundamentals.
- Further financial development could convey net benefits to the region, provided there is adequate regulatory oversight to prevent excesses.
Key findings on financial access and market development
- Access to financial institutions: expanded notably in the past decade; LAC compares favorably with other emerging market regions on this dimension.
- Broader financial development: LAC lags peers, especially in market development (e.g., securities and stock markets).
- Heterogeneity: substantial variation across countries in levels and types of financial development.
- Macro fundamentals mismatch: many LAC financial systems are underdeveloped relative to their macroeconomic fundamentals.
Policy implications and recommendations
- Further financial development can yield net benefits for growth and stability.
- Adequate regulatory oversight is required to prevent excesses that could undermine stability as financial development advances.