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Financial Development in Latin America and the Caribbean : Stylized Facts and the Road AheadThe paper documents the major trends in
 financial development in Latin America and the Caribbean
 since the early 1990s. The paper compares trends in Latin
 America and the Caribbean with those in Asia, Eastern
 Europe, and advanced countries and compares countries within
 Latin America and the Caribbean. The findings show that
 financial systems in the Latin America and the Caribbean
 region have become more diversified and more complex. In
 particular, domestic financial systems have become less
 bank-based, with bond and stock markets playing a larger
 role; institutional investors have gained some space in
 channeling domestic savings, thus increasing the
 availability of funds for investment in capital markets; and
 several economies in the region have started to reduce
 currency and maturity mismatches. Nonetheless, a few large
 companies continue to capture most of the domestic savings.
 And because these trends have unfolded more slowly than
 pro-market reformers had envisioned, broad, market-based
 financial systems with dispersed ownership have yet to
 materialize fully in the region. As a result, convergence is
 still largely failing to happen and the region's
 financial systems remain less developed than those of the
 advanced economies and several other emerging economies,
 most notably those in Asia.
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Financial Sector Assessment : MalaysiaMalaysia, as many of its Asian
 neighbors, experienced significant macro/financial distress
 in the late 1990s. The transformed and strengthened
 financial sector has been able to weather the recent global
 financial crisis well. Financial market intermediaries 
 reliance on cross-border and interbank funding remains
 limited. Banking institutions are well capitalized and are
 expected to be able to meet Basel three capital requirements
 comfortably by the 2019 implementation deadline. Asset
 quality has improved significantly over the last 5 years and
 banks are profitable, with low cost-to-income ratios
 compared to regional peers. The authorities have taken steps
 to monitor and mitigate the potential significant risks of
 recent rapid loan growth. The regulatory and supervisory
 regimes for banking, insurance and securities are well
 developed and exhibit a high degree of compliance with
 international standards. Government equity holdings in the
 financial sector, both direct and indirect, are extensive.
 Further development of the domestic Islamic financial system
 presents both opportunities and challenges.
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Financial Sector Assessment : Republic of LatviaLatvia has a well-developed financial
 sector, but in the aftermath of the 2008-09 global financial
 crisis, access to finance has become a major constraint for
 the development of private enterprises. Credit to the
 private sector in Latvia, at above 100 percent of Gross
 Domestic Product, or GDP, is one of the highest in Eastern
 Europe, after significant growth over the last decade.
 However, in the aftermath of the 2008-09 financial crisis,
 credit growth has been negative (average annual growth of -7
 percent between FY2009-2011) and access to finance has
 become one of the most significant obstacles for growth
 according to enterprises (close to 30 percent of firms
 identify it as an obstacle in 2009, versus 2 percent before
 the crisis). This contributed to a significant decline in
 the volume of private investment, which dropped by 48
 percent between 2008 and 2010. Credit constraints are more
 severe in specific segments, including smaller firms. In
 response to these challenges, the Government has supported
 credit to the private sector through various instruments,
 some of which may need to be reviewed. Support has been
 provided through various financial instruments aimed at
 enhancing the accessibility and affordability of credit and
 implemented trough public bodies and commercial financial
 intermediaries. It will also be important to ensure the
 programs create adequate incentives for financial
 intermediaries to expand services to underserved markets in
 a sustainable manner, and that the programs lever the
 established capacity and expertise of robust commercial
 lenders, minimizing competition with such lenders.