Click here for search results
The long and the short of emerging market debt
 
Author:Opazo, Luis; Raddatz, Claudio; Schmukler, Sergio L.; Collection Title:Policy Research working paper ; no. WPS 5056
Country:Chile; Date Stored:2009/09/16
Document Date:2009/09/01Document Type:Policy Research Working Paper
SubTopics:Emerging Markets; Debt Markets; ; Deposit Insurance; Investment and Investment ClimateLanguage:English
Region:Latin America & CaribbeanReport Number:WPS5056
Volume No:1 of 1  

Summary: Emerging economies have tried to promote long-term debt because it reduces maturity mismatches and the probability of crises. This paper uses unique evidence from the leading case of Chile to study to what extent there is domestic demand for long-term instruments. The authors analyze monthly asset-level portfolios of Chilean institutional investors (mutual funds, pension funds, and insurance companies) and compare their maturity structure to that of US bond mutual funds. Despite being thought to invest long term, Chilean asset-management institutions (mutual and pension funds) hold large amounts of short-term assets relative to US mutual funds and Chilean insurance companies. Short-termism is not driven by lack of instrument availability or tactical behavior. Instead, it seems to be explained by the desire to minimize inflation risk and, more importantly, by manager incentives that tilt demand toward short-term instruments. Extending the maturity of emerging market debt may require reducing risk and reshaping investor incentives.

Official Documents
Official, scanned versions of documents (may include signatures, etc.)
File TypeDescriptionFile Size (mb)
PDF 54 pagesOfficial version*3.78 (approx.)
TextText version**
How To Order

* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.
** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.



Permanent URL for this page: http://go.worldbank.org/OBVFZUNK50