Financial Regulation and Supervision in Emerging Markets. The Experience of Latin America since the Tequila Crisis

regulation, banking, Latin America

Investment finance, saving and funding and financial systems in economic development: theory and lessons from Brazil

This thesis discusses the Post Keynesian theoretical perspective on the role of banks, financial markets and savings in the process of economic development in the light of the Brazilian experience from 1947 to 1983. In contemporary Post Keynesian theory, growth and investment are determined by long-term entrepreneurial expectations and the availability and cost of finance. Finance is sharply distinguished from saving - which is said to derive from, rather then be a precondition for, growth. The supply of finance in economies with a developed financial structure is determined, thus, by banks and their expectations. Saving, which funds (but does not finance) capital accumulations, hence has an important role, in the Post Keynesian theoretical perspective, in maintaining the financial stability of the growing economy. Post Keynesian theory, nevertheless, is based on a specific type of financial system, with well-developed banking and non-banking financial institutions and markets for a diversified range of financial assets. Most developing countries, in contrast, do not have developed financial markets, and growth has to depend heavily on bank credit. Such credit-based financial structures need to develop alternative institutions to finance - and, especially, fund - long-term investment, to avoid the risk of financial instability and other possible adverse side-effects of growth. The theoretical modifications to Post Keynesian theory, necessary in applications to developing countries, are discussed in the context of the Brazilian case. The period from 1947 to 1983 in the history of Brazilian economic development was chosen for two interrelated reasons. First, there are two clear cycles in the process of industrialisation of the country during the period 1947-55 and 1967-83. Second, and perhaps more importantly, the intervening period saw a reform (in 1964-65) which substantially changed the functioning of the financial markets. The reform focused on long-term financing, recommending increases in the real internal interest rates (through indexation) and a greater openness to foreign borrowing, in order to increase the availability of loanable finds. These measures, however, produced a highly fragile and speculative financial system, which continued to depend upon the state for a long-term investment funds and tended to borrow foreign currency at higher levels than the finance requirements of the country warranted. Therefore, using a Post Keynesian approach, this thesis maintains that the 1964-65 financial reform was based on a misguided theory and that, consequently, in a great extent responds for Brazil's recent imbalanced path of development

Financial Regulation and Supervision in Emerging Markets: The Experience of Latin America since the Tequila Crisis”. CEPAL

The increasing integration of international financial markets poses new challenges to domestic financial markets everywhere, but especially in developing countries. The financial crises of 1994-95 and 1997-98 sounded wake-up calls to Latin America and East Asia, respectively, indicating that regulation and supervision needed to be strengthened substantially. Since then, important steps have been taken to set rules and ensure their implementation, but financial regulation and supervision do not take place in a vacuum. On the one hand, they must be consistent with domestic macroeconomic policies, and they need a supportive macroeconomic environment in which to operate. On the other hand, they have to take into account the new international rules being proposed by the Bank for International Settlements (BIS), the International Monetary Fund (IMF), and others. And, of course, all of this must be done in the context of scarce resources, especially trained personnel. This chapter looks at these issues from the viewpoint of Latin America, although many of the same problems and attempts at solutions can be found in other developing regions as well. 2 We begin with a brief look at the changing structure of the financial sector as a whole, with particular emphasis on changes among actors. Despite these changes, however, banks continue to dominate the sector and so we focus heavily on them in the analysis. In this context, we turn t

Desarrollo emprendedor: América Latina y la experiencia internacional

Esta publicación analiza el perfil de los emprendedores y la forma en que ellos crean negocios de alto crecimiento en trece países de América Latina, el este de Asia y el sur de Europa. Asimismo, ofrece un conjunto de estudios de caso sobre políticas y programas de desarrollo emprendedor en América y en Europa. El análisis comparativo de los trece sistemas de desarrollo emprendedor, en combinación con los estudios de caso, permite identificar un conjunto de áreas y recomendaciones a partir de las cuales los gobiernos y las agencias de desarrollo de América Latina y el Caribe pueden actuar a fin de promover la creación de empresas e impulsar el desarrollo del sector privado.