2003 Reports

Domestic Financial Regulations in Developing Countries: Can They Effectively Limit the Impact of Capital Account Volatility?

Rojas-Suarez, Liliana

The view taken in this paper is that in order to provide advice to developing countries on how to improve regulation and supervision of financial markets, it is first necessary to answer (1) whether commonly used regulatory tools have been effective in reducing the adverse effects of capital flow volatility on domestic financial markets; (2) whether appropriate regulatory and supervisory tools in developing countries need to be different from those that work in industrial countries and even differ between developing countries at different degrees of financial sector development.