Uruguay : Financial Sector Review

The study reviews Uruguay's financial sector, identifying a well-developed banking sector, which reflects off-shore banking growth stimulated by regional macroeconomic instability, and by the country's strict national banking laws. By contrast, the country's capital market is underdeveloped, with a market capitalization of less than one percent of GDP, compared to the average ten percent in emerging markets. Similarly, the contractual savings sector, including pension/mutual funds, and insurance companies, is highly incipient. The small open economy has significant implications for its financial sector strategy, since its domestic economy is not large enough to sustain a domestic financial sector, particularly considering increased border trade in financial services, via electronic banking, and securities trading. Thus, its alternative may be to become highly competitive in banking services, including exporting these services. Based on substantiated evidence, it is suggested that the comparative advantage of Uruguayan banks is gradually eroding, but should it become competitive, the country could export some banking services, provided it explores setting up a regional stock exchange within MERCOSUR, which may well improve liquidity, rather than revive local exchanges; improve the constrained private participation (resulting from a preponderant State role); and, strengthen regulatory, and supervisory framework.

Bibliographic Details

Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2000-11-15
Subjects:	FINANCIAL DEVELOPMENT, BANKING SYSTEMS, MACROECONOMIC STABILIZATION, ECONOMIC INSTABILITY, BANKING LEGISLATION, CAPITAL MARKET INTEGRATION, GROSS DOMESTIC PRODUCT, EMERGING ECONOMIES, CONTRACTUAL SAVINGS, PENSION FUNDS, MUTUAL FUND RATING, INSURANCE COMPANY RATINGS, OPEN ECONOMIES, FINANCIAL SYSTEMS, DOMESTIC CAPITAL MARKETS, FINANCIAL SERVICES DATA PROCESSING, ELECTRONIC FUNDS TRANSFER, SECURITIES TRANSACTIONS, BANKING REGULATIONS, STOCK MARKETS, COMPETITIVENESS, SERVICE EXPORTS, MERCOSUR, REGIONAL INTEGRATION, LIQUIDITY POLICY, PRIVATE SECTOR DEVELOPMENT, STATE INTERVENTION, LEGAL & REGULATORY FRAMEWORK, SUPERVISORY STRUCTURES, TRADING ARRANGEMENTS ACCOUNTING, AFFILIATE, AFFILIATES, AGRICULTURE, ARBITRAGE, ASSET BACKED SECURITIES, BALANCE SHEETS, BANK ASSETS, BANK LENDING, BANK LIABILITIES, BANK LOANS, BANKING CRISIS, BANKING REGULATION, BANKING SECTOR, BANKING SERVICES, BANKING SYSTEM, BANKRUPTCY, BANKS, BOARDS OF DIRECTORS, BONDS, BOOK VALUE, CAPITAL ADEQUACY, CAPITAL CONTROLS, CAPITAL FLIGHT, CAPITAL INFLOWS, CAPITAL MARKETS, CAPITAL REQUIREMENT, CAPITALIZATION, CAR, CDS, CENTRAL BANK, CERTIFICATES OF DEPOSIT, COMMERCIAL BANKS, COMPARATIVE ADVANTAGE, COMPARATIVE ADVANTAGES, CONSUMER PROTECTION, CONSUMER PROTECTION LEGISLATION, CONTINGENT LIABILITIES, CONTRACT ENFORCEMENT, CPI, DEBT, DEBT OVERHANG, DENOMINATED LOANS, DEPOSIT INSURANCE, DEPOSITORS, DEPOSITS, DEVALUATION, DIRECT FINANCING, DISINTERMEDIATION, DIVIDENDS, ECONOMIC ACTIVITY, ELECTRONIC BANKING, EMERGING MARKETS, EXCHANGE RATE, FINANCIAL DEEPENING, FINANCIAL DISINTERMEDIATION, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIARIES, FINANCIAL INTERMEDIATION, FINANCIAL MARKETS, FINANCIAL RATIOS, FINANCIAL SECTOR, FINANCIAL SECTOR REFORM, FINANCIAL SERVICES, FINANCIAL TRANSACTIONS, FISCAL YEAR, FOREIGN ASSETS, FOREIGN BANKS, FOREIGN EXCHANGE, GDP, GLOBALIZATION, GNP, GOVERNMENT SECURITIES, GROWTH RATE, HOUSING, IMPORT QUOTAS, INCOME, INDEXATION, INDIVIDUAL ACCOUNTS, INEFFICIENCY, INFLATION, INSOLVENCY, INSOLVENT BANKS, INSURANCE, INTEREST RATES, INTERNATIONAL ACCOUNTING STANDARDS, INTERNATIONAL FINANCIAL TRANSACTIONS, IPO, JUDICIAL SYSTEMS, LABOR COSTS, LABOR UNIONS, LAWS, LEGAL FRAMEWORK, LEGISLATION, LIMITED DEPOSIT INSURANCE, LIQUIDATION, LIQUIDITY, MACROECONOMIC STABILITY, MANDATES, MONETARY POLICIES, MORAL HAZARD, MORTGAGE LENDING, MUTUAL FUND, MUTUAL FUNDS, NET WORTH, OIL, OIL PRICES, OPERATING COSTS, OVERHEAD COSTS, OVERVALUATION, PARTIAL PRIVATIZATION, PENALTIES, PER CAPITA INCOME, POPULATION GROWTH, PORTFOLIOS, POVERTY LINE, PRICE CONTROLS, PRICE SUBSIDIES, PRIVATE BANKING, PRIVATE BANKS, PRIVATIZATION, PRODUCTIVITY, PROFITABILITY, PROPERTY RIGHTS, PRUDENTIAL REGULATIONS, PUBLIC DEBT, PUBLIC ENTERPRISES, RATING AGENCIES, REAL GDP, RECESSION, REGULATORY FRAMEWORK, RETIREMENT, RETURN ON ASSETS, RETURN ON EQUITY, RISK MANAGEMENT, SAVINGS, SECURITIES, SECURITIES MARKETS, SECURITIES TRADING, SECURITIZATION, STATE ENTERPRISES, STATE OWNED BANKS, STOCK EXCHANGES, SUBSIDIARY, TRANSPARENCY, TRUSTS, VALUATION, VALUE ADDED, WEALTH,
Online Access:	http://documents.worldbank.org/curated/en/2000/11/729310/uruguay-financial-sector-review https://hdl.handle.net/10986/14458
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