To the extent that capital markets are poorly developed, or lack liquidity and transparency, domestic investors will reduce investment in favour of consumption, and thereby lower savings. Furthermore, investors, both regional and non-regional will seek to diversify portfolios, and will tend to invest in countries with more developed liquid and transparent capital markets which offer a wider variety of instruments.
These factors and the ability to enter and exit at will are critical to a well functioning market and are still challenges in most Caribbean markets. There is substantial room for improving debt markets in the region - where the development of secondary debt markets lag equity markets. Possibly only Jamaica and Trinidad can be considered to be countries with a genuine secondary market.