Long-term Finance in Latin America: A Scoreboard Model

Abstract

work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/ licenses/by-nc-nd/3.0/igo/legalcode) and may be reproduced with attribution to the IDB and for any noncommercial purpose. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.Note that link provided above includes additional terms and conditions of the license.The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.http://www.iadb.org 2016 1 Abstract * Theory and empirical work have shown that long-term finance is critical for households, firms and government and for the overall development of the economy. The development of efficient and sustainable long-term financial markets, however, depends on macroeconomic stability and an effective institutional framework. Policy initiatives, including tax policy, regulation and competition policies can also improve the availability of long-term finance within these more fundamental constraints. However, country characteristics including size and demographic structure also play an important role. When comparing the provision of long-term finance across countries, it is important to take into account both structural characteristics and long-term policy constraints. A scoreboard for long-term finance in Latin America is suggested with indicators comparing different dimensions of long-term finance. Specifically, the paper suggests several indicators of the depth and inclusiveness of long-term financial markets, to be benchmarked according to country characteristics, and several policy variables, to be included in a scoreboard for long-term finance in Latin America. JEL codes: G10, G18, G21, G22, G23, G28

Corporate debt maturity in developing countries: Sources of long and short‐termism

“…The perceived lack of long‐term finance for firms in developing countries is a major concern for academics and policymakers (G20, ; Beck, ; World Bank, ). Long‐term debt allows firms to pursue costly investments that take time to mature.…”

Capital inflows, sustained investment surges and the role of external economies of scale in a developing economy

“…While the corporate bond market is gaining importance in high middle-income countries, it is still relatively small and geared more toward short-term funding in most developing countries. See, for example, Beck (2016). Also, the consequences of capital inflows may show up in the form of easier credit conditions rather than interest rate changes.…”

Corporate Debt Maturity in Developing Countries: Sources of Long- and Short-Termism

“…The perceived lack of long-term finance for firms in developing countries is a major concern for academics and policy makers (G20, 2013;Beck, 2016;World Bank, 2016). Long-term debt allows firms to pursue costly investments that take time to mature.…”

“…Second, several policy reports and academic papers discuss the perils associated with the recent debt expansion in emerging markets (Shin, 2013;Acharya et al, 2015;IMF, 2015;McCauley et al, 2015;Sobrun and Turner, 2015;The Economist, 2015, 2016. These studies argue that the rise in foreign currency debt has increased corporate vulnerability to the extent that debt burdens would get exacerbated in the event of capital flights or sudden currency depreciations.…”