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The major objective of this paper is to investigate institutional arrangements as a determinant of loan repayment in the Chilean financial market. A second aim is to analyze the effects of these arrangements on borrowers’ behavior. Although La Porta et al. (1997, 1998) classify Chile as a French Civil Law country, the law and private arrangements have evolved consistently with the capital market development to protect the rights of the creditors. This is consistent with relatively low rates of bad loans, ranking from 1.1 to 2.0 percent in 1993-1997. We examine different variables which may be related to loan repayment: (a) limitations on the access to credit, (b) macroeconomic stability, (c) collection technology, (d) bankruptcy code, (e) information sharing, (f) the judicial system, (g) prescreening techniques and (h) major changes in financial market regulation. Based on the discussion presented in the paper plus regression analyses, we conclude that a satisfactory performance of the Chilean credit market, in terms of loan repayments and credit market development, hinges on a good information sharing system, an advanced collection technology, a good macroeconomic performance, credit market development and major changes in financial market regulation.
This paper considers whether institutional factors, in this instance electoral systems and procedures, affect Latin American countries' fiscal performance as measured by the size of the public sector, fiscal deficits, the size of the public debt, and the degree of procyclality of fiscal policy. The authors find that electoral systems characterized by large district magnitude and high political fra ... (View publication)
Latin American countries suffer from severe macroeconomic volatility. What is the link between this volatility and the sustainability of fiscal policy? Does the cause and effect relationship run only from macro to fiscal or is it a two-way street? ¿Como armar el rompecabezas fiscal? examines this relationship in the context of a search for appropriate indicators of fiscal policy sustainability. Th ... (View publication)
Monetary normalization may be a chronicle foretold, but countries still have the power to influence the outcome for their own economies. This report focuses on the risks Latin American and Caribbean countries face and how they can reduce vulnerabilities and enhance opportunities. (View publication)
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