Private Equity and Financial Development in Latin America

Shallow capital markets are a key bottleneck for private sector development in Latin America. This new book introduces private equity into the financial development debate through a Latin American lens and proposes a shift in the discussion from institutional explanations to an actor-based argument centered on the role of institutional investors.

Format: Paperback / softback
Length: 252 pages
Publication date: 03 February 2023
Publisher: Springer Nature Switzerland AG

Shallow capital markets pose a significant impediment to private sector development in Latin America. Despite this, there is a limited body of literature on capital markets, corporate governance, regulatory reform, and business associations in this region. To address this gap, this new book introduces private equity into the financial development discourse through a Latin American lens. The author examines the cases of Brazil, Mexico, Chile, Colombia, and Argentina and proposes a shift in the financial development discussion from institutional explanations focused solely on rules to an actor-based argument centered on the role of institutional investors, particularly pension funds.

Introduction:
Latin America has experienced significant economic growth in recent decades, driven by factors such as increased investment, technological innovation, and globalization. However, the region still faces challenges in terms of capital formation, financial inclusion, and economic inequality. Shallow capital markets are a key bottleneck for private sector development in Latin America. These markets are characterized by limited liquidity, high transaction costs, and limited access to finance for small and medium-sized enterprises (SMEs). This lack of capital access hinders the growth and competitiveness of Latin American businesses, and limits their ability to create jobs and contribute to the region's economic development.

Literature Review:
There is a growing body of literature on capital markets and corporate governance in Latin America, particularly in recent years. However, much of this literature focuses on developed countries in the region, such as Brazil, Mexico, and Chile. There is a need for more research on capital markets and corporate governance in less developed countries, such as Colombia and Argentina, which have significant economic potential but face challenges in terms of capital formation and financial inclusion.

Private Equity as a Tool for Financial Development:
Private equity is a type of investment that provides capital to companies that are not listed on public stock exchanges. It is typically provided by private equity firms, which invest in companies with high growth potential and seek to improve their financial performance and value. Private equity has been used in developed countries to support small and medium-sized enterprises (SMEs) and promote economic growth. However, there is limited research on the use of private equity in Latin America.

Case Studies:
The author of this book examines the cases of Brazil, Mexico, Chile, Colombia, and Argentina to explore the role of private equity in financial development. The author argues that private equity can play a significant role in promoting economic growth and reducing poverty in Latin America. The author also proposes a shift in the financial development discussion from institutional explanations focused solely on rules to an actor-based argument centered on the role of institutional investors, particularly pension funds.

Conclusion:
Shallow capital markets are a significant impediment to private sector development in Latin America. However, there is potential for private equity to play a significant role in promoting economic growth and reducing poverty in the region. By examining the cases of Brazil, Mexico, Chile, Colombia, and Argentina, this book provides valuable insights into the role of private equity in financial development and proposes a shift in the financial development discussion from institutional explanations to an actor-based argument. This shift can help policymakers and investors better understand the challenges and opportunities in Latin America's capital markets and promote more inclusive and sustainable economic growth.

Weight: 354g
Dimension: 210 x 148 (mm)
ISBN-13: 9783030889852
Edition number: 1st ed. 2022