These products allow investors to hedge and unwind positions easily without having to transact in cash markets, expanding the participant pool. Syndication and securitization also lead to greater risk distribution. Commercial and industrial (C&I) lending potential has expanded with the adoption of syndication practices, allowing credit risks to be spread across a greater number of participating banks and nonbank lenders.
Full capital account liberalisation may not be the best strategy for many developing and emerging economies. A careful analysis of national circumstances is needed here – followed by a careful choice of economic policies. 7 Here, too, simply hoping for more finance to lead to more development is a tempting strategy, but not a promising one.