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Developing countries are trying to develop long-term financial markets and institutional investors are expected to play a key role. This paper uses unique evidence on the universe of institutional investors from the leading case of Chile to study to what extent mutual funds, pension funds, and insurance companies hold and bid for long-term instruments, and which factors affect their choices. The paper uses monthly asset-level portfolios to show that, despite the expectations, mutual and pension funds invest mostly in short-term assets relative to insurance companies. The significant difference across maturity structures is not driven by the supply side of debt or tactical behavior. Instead, it seems to be explained by manager incentives (related to short-run monitoring and the liability structure) that, combined with risk factors, tilt portfolios toward short-term instruments, even when long-term investing yields higher returns. Thus, the expansion of large institutional investors does not necessarily imply longer-term markets.

Capital Markets --- Debt Markets --- Debt Maturity --- Deposit Insurance --- Emerging Markets --- Finance and Financial Sector Development --- Institutional Investors --- Insurance Industry --- Long-Term Finance --- Maturity Structure --- Mutual Funds --- Non Bank Financial Institutions --- Pension Funds --- Private Sector Development

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The link between infrastructure and economic growth is widely acknowledged-as is the infrastructure gap, which can act as a break on growth in emerging markets and developing economies (EMDEs). Since the global economic and financial crisis, the challenges of raising financing for infrastructure projects in EMDEs are also well known. The challenges come from stretched government finances and restrictions on global bank lending. Hence much attention has been focused on the potential for institutional investors as a growing potential source of financing. This paper argues that infrastructure projects can potentially deliver long-term returns, but investments, particularly in EMDEs need to be carefully structured to meet the needs of both sides. The paper first considers the existing types of institutional investors and their potential for filling the infrastructure financing gap. The challenges of adjusting asset allocations, particularly toward EMDE infrastructure, are discussed and examples of projects where institutional investors have been involved are given. Finally, the paper considers a range of models for the involvement of institutional investors in EMDEs and makes initial proposals for how to determine which model fits best in a particular country context.

Banks and Banking Reform --- Debt Markets --- Emerging Markets --- Emerging-Markets and Developing Economies --- Finance and Financial Sector Development --- Infrastructure --- Institutional Investors --- Insurance Companies --- Mutual Funds --- Non Bank Financial Institutions --- Pension Funds --- Private Sector Development --- Social Security Funds

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This Selected Issues paper reviews business investment patterns in France during the crisis. The main motivation is to explore whether investment has recently evolved in line with established determinants or displayed somewhat unconventional dynamics. This paper addresses three distinct questions. First, has recent investment behavior essentially been consistent with past trends or is there any discernible structural break as a result of the crisis. Second, what drove the contraction in investment during the crisis. Third, what is the investment outlook and can a swift and strong rebound going forward be expected. The paper presents main results and the outlook for investment.

Investments, Foreign --- France --- Economic conditions. --- Economic policy. --- Exports and Imports --- Investments: General --- Investments: Stocks --- Macroeconomics --- Production and Operations Management --- Trade: General --- Investment --- Capital --- Intangible Capital --- Capacity --- Macroeconomics: Production --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- General Aggregative Models: General --- International economics --- Investment & securities --- Exports --- Private investment --- Export performance --- Imports --- Capacity utilization --- International trade --- National accounts --- Production --- Saving and investment --- Industrial capacity --- Stocks

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SUMMARY The Korean authorities have made significant progress since the last FSAP in revising the securities regulatory framework, with the current framework achieving good overall compliance with the International Organization of Securities Commissions (IOSCO) Principles. Importantly, the earlier legal impediments to international cooperation and exchange of information have been removed. Since 2011, Korea also applies the Korean International Financial Reporting Standards (K-IFRS) that follow the International Financial Reporting Standards (IFRS). Although the regulators’ responsibilities are defined in legislation, the complexity of the structure obscures the transparency of the decision-making processes. The responsibility for deciding on a particular supervisory or enforcement action can lie either at the Financial Services Commission (FSC), Securities and Futures Commission (SFC), or Financial Supervisory Service (FSS), depending on the nature and gravity of action, but it is not always clear which one of them is ultimately in charge. The process is further complicated by the use of pre-deliberation committees at various levels. Self-regulatory organizations—the Korea Exchange (KRX), the Korea Financial Investment Association (KOFIA) and the Korean Institute of Certified Public Accountants (KICPA)— also play a role in the regulatory and supervisory processes. Publication of additional information on the decision-making structure and processes would be beneficial. Operational cooperation and coordination between the various authorities is currently addressed by having the agencies represented in each others’ decision-making bodies. However, the full participation of the Minister of Strategy and Finance at the FSC Board has the potential of compromising the independence of the FSC’s supervisory and enforcement decisions. Consideration should be given on how best to mitigate the potential for undue political influence arising from such governance arrangements by, for example, restricting the participation of the Minister of Strategy and Finance in the supervisory and enforcement decisions. Attention should also be paid to ensuring that the various arrangements for gathering commercial input provide for equal and transparent treatment of market participants.

Finance --- Business & Economics --- Investment & Speculation --- Investments: General --- Investments: Stocks --- Public Finance --- Investment --- Capital --- Intangible Capital --- Capacity --- General Financial Markets: General (includes Measurement and Data) --- Auditing --- Public Administration --- Public Sector Accounting and Audits --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Macroeconomics --- Investment & securities --- Management accounting & bookkeeping --- Private investment --- Securities --- External audit --- Stocks --- National accounts --- Financial institutions --- Public financial management (PFM) --- Saving and investment --- Financial instruments --- Korea, Republic of

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This Selected Issues paper provides a brief overview of Slovakia’s transformation over this period. The note is divided into three parts. The first section offers some historical background on the run-up to EU accession. The paper also discusses the economic impact of EU accession and highlights the main challenges that Slovakia still faces. Although the first decade in the EU has seen successes, Slovakia faces important challenges to consolidate its position and close the gap with more advanced economies. A first long-term challenge is to shift from efficiency to an innovation-driven growth model. Actions to improve the business environment and domestic infrastructure could lay the foundations for stronger and more job-rich growth. In Slovakia, the high unemployment rate reflects the faulty working of three key mechanisms: the transition from school to work; the transition from unemployment back to employment; and mobility across regions. In order to address this situation, wide-ranging policies need to be implemented. The quality of education and training needs to be improved in order to better correspond to labor market needs. The ongoing reform of vocational education and training is a step in the right direction.

European Union --- E.U. --- Membership. --- Banks and Banking --- Exports and Imports --- Labor --- Industries: General --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Macroeconomics: Production --- Trade Policy --- International Trade Organizations --- Trade: General --- Financial Institutions and Services: General --- Banking --- Finance --- Labour --- income economics --- International economics --- Commercial banks --- Nonbank financial institutions --- Industrial production --- Stocks --- Financial institutions --- Production --- Loans --- Banks and banking --- Financial services industry --- Exports --- Industries --- Slovak Republic