Business Finance in Less Developed Capital Markets

EDGAR ORTIZ

Research in business finance is in its infancy in Mexico and Latin America (LA). Thus we must identify priority topics that should be pursued now and in the near future. For this purpose, we should first pinpoint the main sources of boundaries on research and their impacts on this endeavor. Currently, three important, interrelated problems restrict research in finance: (1) distorted development of financial institutions+ADs- (2) weak academic development in business administration, particu­+00A- larly in the area of finance+ADs- and (3) the debt crisis.

Full-fledged modernization of Mexico and all Latin American countries began after World War II. Then, these nations basically adopted import-substitution models to promote economic growth and welfare. Two major schools of thought public policy making: Keynesianism and structuralism, Latin America's contribution to world economic thought. ¹ Both supported strong state intervention in the economy. Rival paradigms had a limited role. Monetarism gathered some influence among central banks and some state financial institutions, but it only played a major role when balance-of-payments disequilibria forced these nations to adopt adjustment measures. Marxism and neo-Marxist thinking, particularly dependency theory, where again many Latin Americans have made fine contributions, had little direct influence in policy making. However, serious research and criticisms from their supporters did lead the state to strengthen its role in the economy, often adopting populist postures. ²

As a result, public enterprises and public banking institutions were created to

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