Saturday, June 30, 2007

Fulfilling the potential of Latin America's financial systems

According to Luis Andrade, Diana Farrell, and Susan Lund, from McKinsey, most Latin countries have adopted important macro reforms during the 1990s. However, their financial systems have remained small. The lack of financial depth in the region, as a whole, tend to decrease the availability of credit and loans. It then becomes hard for small companies to raise money. The authors argue the situation may improve. This is so because since 2002 Latin America’s financial assets have grown by 20 percent annually.

For the authors, sustainable growth in the region relies on the willingness of policy makers to decrease the level of public debt while pursuing reforms in the financial and legal sectors as a way to attract more business in the region.

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