Towards Strong and Stable Capital Markets in Emerging Market Economies

8 Pages Posted: 6 Oct 2014

Date Written: January 2014

Abstract

This paper identifies and discusses the conditions needed for achieving strong and stable capital markets in emerging market economies, which at present remain illiquid and underdeveloped. These conditions can be grouped into four interrelated and complementary pillars: macroeconomic stability, sound banking systems, high institutional quality and an adequate regulatory and supervisory framework. Failure to strengthen any of these pillars will weaken the others. The paper also emphasises that the inability of emerging markets to issue safe assets imposes a major constraint on the resilience of their local capital markets to external shocks.

Full publication: Long-Term Finance: Can Emerging Capital Markets Help?

Keywords: capital markets, emerging markets, financial stability, financial development

JEL Classification: G18, G2, G3, O16

Suggested Citation

Rojas-Suarez, Liliana, Towards Strong and Stable Capital Markets in Emerging Market Economies (January 2014). BIS Paper No. 75c. Available at SSRN: https://ssrn.com/abstract=2474016

Liliana Rojas-Suarez (Contact Author)

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States

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