In countries where such conditions have been lacking, borrowing has tended to be predominantly at the short end of the market. Moreover, a stable macroeconomic framework also has a positive impact on the structure of the markets and on the financial instruments.
Recent empirical studies on the investment behaviour of institutional investors tend to confirm that macroeconomic stability improves the return characteristics of the EME bond markets and makes them more attractive for institutional investors. III. However, while a stable macroeconomic framework is a necessary condition for developing and strengthening local currency bond markets, it is not sufficient.