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Capital Markets in the Dominican Republic

Tapping the Potential for Development

image of Capital Markets in the Dominican Republic

This report presents a detailed analysis of the Dominican Republic’s financial system and offers a series recommendations to develop the country’s capital markets. The country has recently made big advances in the development of its capital markets, achieving high solvency in the banking sector, improving  the institutional framework for the management of public debt and experiencing steady growth in the value of both the private bond market and the assets of pension funds. However, the level of financing directed to the economy is still small, given the country’s level of development, and there are important structural challenges that need to be addressed. Both the Central Bank and the Finance Ministry issue public debt, each with different purposes, and there appears to be little coordination between the two organs in terms of rate of returns and maturity of the issued bonds. The primary market of private bonds suffers from a long and complicated issuing process that stems from coordination and communication problems among the different regulators. The bond secondary market lacks key aspects of market infrastructure. Finally, institutional investors invest mostly on public debt instruments and bonds issued by finance sector firms.

English Spanish

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Financial literacy, new instruments and market expansion

OECD Development Centre

Financial literacy is a key element for capital market development. Therefore, a financial literacy campaign should be carried out for each type of saver, private companies should be involved by improving their understanding of the capital market, and the regulatory bodies could be kept highly qualified and competitive. Additionally, the government should strive to facilitate access to financing for small and medium-sized enterprises outside the traditional sources. In the long term, remittances could lead to the creation of two types of instrument: the securitisation of future remittance flows and “diaspora bonds”. Finally, it is important to continue promoting new financial products and to seek a broader base of investors through co-operation with other stock exchanges in the region.

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