financial intermediation and its impact on capital formation.pdf

LIMITED LC/CAR/L.73 20 December 2005 ORIGINAL: ENGLISH FINANCIAL INTERMEDIATION AND ITS IMPACT ON CAPITAL FORMATION IN THE CONTEXT OF THE CARICOM SINGLE MARKET AND ECONOMY (CSME) ______________ This document has been reproduced without formal editing. Table of contents Abstract Introduction1 Financial intermediation in the Caribbean – An overview 3 The cost, quantum and quality of finance in the Caribbean6 The direction of finance 8 The term finance bugbear 14 Market structure, intermediation and business investment the nexus16 Finance for small and medium size enterprises (SMEs)17 The impact of macroeconomic policy stance18 Capital markets- Challenges and opportunities for business finance20 Implications of the CSME for financial intermediation and capital formation25 The demand for finance-the role of entrepreneurship 27 Recommendations to strengthen the link between financial intermediation and capital formation in the Caribbean 29 Conclusion 33 References35 List of Tables Table 1: Average share of loan credit to GDP by sector for the OECS1990-200410 Table 2: Jamaica- Credit by sector as a percentage of total credit12 Table 3: Jamaica Stock Exchange indicators22 List of Figures Figure 1: OECS Selected Saving and Investment Indicators as Percentage of GDP13 Figure 2: Guyana: Consumption, Gross Capital Formation and Net Exports as a Percentage of GDP14 Figure 3: Trinidad and Tobago Stock Market Capitalisat