Abstract
Emerging Markets and Developing Economies (EMDEs) have been a significant driver of global growth in the twenty-first century. This paper analyses the changing contours of the financial sector and the challenges faced by EMDEs in recent years. In these countries, banks and domestic equity markets still continue to be vital as a source of financing for the corporate sector, bond markets. Amongst developing regions, South Asia had the largest equity market capitalization as a share of GDP in 2019, and the growth of corporate bond markets has been facilitated by improved macroeconomic stability, better regulation of bond markets, and protection of retail investors. Finally, the findings relating to financial inclusion (that includes digital and traditional) suggest further promoting access to and usage of formal financial services to maximize society’s overall welfare.
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Notes
- 1.
The variable is defined as domestic private credit to the real sector by deposit money banks as percentage of local currency GDP (Čihák et al., 2013).
- 2.
Gopalakrishnan and Mohapatra (2020) argue that stronger insolvency frameworks that increase creditor rights are associated with improved credit discipline amongst firms. The authors find that the default risk of firms is lower in countries with stronger insolvency regimes.
- 3.
The 18 emerging economies in the study of Caballero et al. (2019) include Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Indonesia, Korea, Malaysia, Philippines, Thailand, Czech Republic, Hungary, Poland, Russia, and Turkey, South Africa, and Israel.
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Mohapatra, S., Mishra, A.K. (2020). The Evolving Financial Landscape in Emerging Markets and Developing Economies. In: Mishra, A.K., Arunachalam, V., Mohapatra, S., Olson, D. (eds) The Financial Landscape of Emerging Economies. Accounting, Finance, Sustainability, Governance & Fraud: Theory and Application. Springer, Cham. https://doi.org/10.1007/978-3-030-60008-2_1
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