The Capital Markets in Latin America: Are they at a turning point?

Kiguel, 2007.

Financial markets in Latin America have traditionally been small and hence they have only played a limited role to finance investment. There are different types of reasons that have been raised to explain the shallowness of the capital markets in the region that in broad terms can be categorized in two groups. First, and perhaps more important is that the Region has a long history of macroeconomic instability, especially in key financial variables such as inflation, the exchange rate and interest rates. This was compounded by defaults in domestic and or foreign debt, the restructuring of financial contracts at times of crisis and recurrent balance of payments crisis that eroded savings in domestic currencies.