1887

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

.

The private debt market and capital market regulation

OECD Development Centre

Despite experiencing sustained growth since 2005, the private debt market is lagging behind in terms of size, maturity and concentration in comparison with the global trend. In the primary market, the lengthy issuance process discourages firms from issuing securities. Moreover, issuers face substantial requirements and additional delays before their securities can be purchased by institutional investors. In the secondary market, it is necessary to increase the effectiveness of the trading platform and the clearing and settlement system, and to introduce a centralised information system in order to boost liquidity and enable price formation. Communication and co- ordination between the different superintendencies should be improved to reduce transaction costs for the market operators. The risks incurred by financial groups must also be suitably managed.

English Spanish

Graphs

This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error