Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Pension funds have been expected to invest in a wide range of securities and provide liquidity to domestic capital markets since they are the most sophisticated investors, with plenty of resources to gather private information and manage portfolios professionally. However, by analyzing unique, monthly asset-level data from the pioneer case of Chile, this paper shows that pension funds tend to herd. This is consistent with pension funds copying each other in their investment strategies as a way to extract information, boost returns, and reduce risk. The authors compute measures of herding across asset classes (equities, government bonds, and private sector bonds) and at different pension fund industry levels. The results show that pension funds herd more in assets for which they have less market information and when risk increases. Moreover, herding is more prevalent across funds that narrowly compete with each other, that is, when comparing funds of the same type across pension fund administrators. There is much less herding within pension fund administrators and across pension fund administrators as a whole. This herding pattern is consistent with incentives for managers to be close to industry benchmarks, which might be driven by both market forces and regulation.

Capital Market Development --- Debt Markets --- Economic Theory & Research --- Emerging Markets --- Institutional Investors --- Investment and Investment Climate --- Investment Pattern --- Macroeconomics and Economic Growth --- Mutual Funds --- Portfolio Allocation

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper studies the extent to which firms in China and India use capital markets to obtain financing and grow. Using a unique data set on domestic and international capital raising activity and firm performance, it finds that the expansion of financial market activity since the 1990s has been more limited than what the aggregate figures suggest. Relatively few firms raise capital. Even fewer firms capture the bulk of the financing. Moreover, firms that issue equity or bonds are different and behave differently from other publicly listed firms. Among other things, they are typically larger and grow faster. The differences between users and non-users exist before the capital raising activity, are associated with the probability of raising capital, and become more accentuated afterward. The distribution of issuing firms shifts more over time than the distribution of those that do not issue, suggesting little convergence in firm size among listed firms.

Access to Finance --- Access to finance --- Banks & Banking Reform --- Bond markets --- Capital market development --- Capital raising --- Debt Markets --- Economic Theory & Research --- Finance and Financial Sector Development --- Firm dynamics --- Firm size distribution --- Macroeconomics and Economic Growth --- Microfinance --- Stock markets

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper has been prepared for policy makers interested in establishing or strengthening financial strategies to increase the financial response capacity of governments of developing countries in the aftermath of natural disasters, while protecting their long-term fiscal balances. It analyzes various aspects of emergency financing, including the types of instruments available, their relative costs and disbursement speeds, and how these can be combined to provide cost-effective financing for the different phases that follow a disaster. The paper explains why governments are usually better served by retaining most of their natural disaster risk while using risk transfer mechanisms to manage the excess volatility of their budgets or access immediate liquidity after a disaster. Finally, it discusses innovative approaches to disaster risk financing and provides examples of strategies that developing countries have implemented in recent years.

Banks & Banking Reform --- Capital market development --- Debt Markets --- Developing countries --- Disbursement --- Emergency financing --- Environment --- Finance and Financial Sector Development --- Financial institutions --- Financial instruments --- Global capital --- Global capital market --- Government budget --- Hazard Risk Management --- Indebtedness --- Insurance --- Insurance & Risk Mitigation --- International bank --- International financial markets --- Liquidity --- Natural disaster --- Natural Disasters --- Public investment --- Returns --- Risk management --- Risk neutral --- Urban Development

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper has been prepared for policy makers interested in establishing or strengthening financial strategies to increase the financial response capacity of governments of developing countries in the aftermath of natural disasters, while protecting their long-term fiscal balances. It analyzes various aspects of emergency financing, including the types of instruments available, their relative costs and disbursement speeds, and how these can be combined to provide cost-effective financing for the different phases that follow a disaster. The paper explains why governments are usually better served by retaining most of their natural disaster risk while using risk transfer mechanisms to manage the excess volatility of their budgets or access immediate liquidity after a disaster. Finally, it discusses innovative approaches to disaster risk financing and provides examples of strategies that developing countries have implemented in recent years.

Banks & Banking Reform --- Capital market development --- Debt Markets --- Developing countries --- Disbursement --- Emergency financing --- Environment --- Finance and Financial Sector Development --- Financial institutions --- Financial instruments --- Global capital --- Global capital market --- Government budget --- Hazard Risk Management --- Indebtedness --- Insurance --- Insurance & Risk Mitigation --- International bank --- International financial markets --- Liquidity --- Natural disaster --- Natural Disasters --- Public investment --- Returns --- Risk management --- Risk neutral --- Urban Development

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Over the past decades, many countries have implemented significant reforms to foster capital market development. Latin American countries were at the forefront of this process. The authors analyze where Latin American capital markets stand after these reforms. They find that despite the intense reform effort, capital markets in Latin America remain underdeveloped relative to markets in other regions. Furthermore, stock markets are below what can be expected, given Latin America's economic and institutional fundamentals. The authors discuss alternative ways of interpreting this evidence. They argue that it is difficult to pinpoint which policies Latin American countries should pursue to overcome their poor capital market development. Moreover, they argue that expectations about the outcome of the reform process may need to be revisited to take into account intrinsic characteristics of emerging economies. The latter may limit the scope for developing deep domestic capital markets in a context of international financial integration.

Bank Policy --- Bond --- Bond Market --- Bond Market Development --- Capital Market --- Capital Market Development --- Capital Market Reforms --- Capital Markets --- Debt Markets --- Domestic Capital --- Domestic Capital Markets --- Economic Theory and Research --- Emerging Economies --- Emerging Markets --- Exchange --- Finance and Financial Sector Development --- Financial Liberalization --- Financial Markets --- International Financial Integration --- Macroeconomics and Economic Growth --- Markets and Market Access --- Private Sector Development --- Stock --- Stock Market --- Stock Market Development --- Stock Markets