Latin America: Financial systems and financing of investment Diagnostics and proposals

This work examines the main characteristics of the financial systems of Latin America, in order to develop proposals for strengthening investment finance in the region. First, a diagnostic is given of the investment-supporting capacities of the region’s banking systems, stock and bond markets, and flows of external financing. Next, an analysis is offered of the principal macroeconomic and microeconomic factors and a number of structural features that have had a hand in the region’s shallow financial development and the system’s failure to adapt to the needs of investment financing. Against this background, proposals are made for expanding the capacity of financial systems to support investment in firms of all sizes, and guidelines are offered for fostering access to long-term credit for smaller enterprises.