OCCASIONAL PAPER 265 Developing Essential Financial Markets in Smaller Economies Stylized Facts and Policy Options Hervé Ferhani, Mark Stone, Anna Nordstrom, and Seiichi Shimizu INTERNATIONAL MONETARY FUND Washington DC 2009 ©International Monetary Fund. Not for Redistribution ©2009 International Monetary Fund Production: IMF Multimedia Services Division Typesetting: Julio Prego Figures: Andrew Sylvester Cataloging-in-Publication Data Developing essential financial markets in smaller economies : stylized facts and policy options / Hervé Ferhani ... [et al.] – Washington, D.C. : International Monetary Fund, 2009. p. cm.—(Occasional paper, 0251-6365 ; 265) Includes bibliographical references. ISBN 978-1-58906-775-2 1. Finance — Developing countries. 2. Money market — Developing countries. 3. Foreign exchange market — Developing countries. 4. Government securities — Developing countries. 5. Stock exchanges — Developing countries. I. Ferhani, Hervé. II. International Monetary Fund. III. Occasional paper (International Monetary Fund) ; no. 265 HG195 .D484 2008 Please send orders to: International Monetary Fund, Publication Services 700 19th Street, N.W., Washington, D.C. 20431, U.S.A. Tel.: (202) 623-7430 Fax: (202) 623-7201 E-mail:
[email protected] Internet: www.imfbookstore.org ©International Monetary Fund. Not for Redistribution Contents Preface vii Executive Summary ix I Introduction 1 II Impediments to Financial Market Development in Smaller Economies 5 Intrinsic Obstacles 5 Structural Obstacles 8 Institutional Obstacles 10 Policy