Latin American Capital Markets

428 OSVALDO R AGATIELLOGlobal convergence marks the trend for the articulation of ethical standardsin professions that operate in the financial markets, such as research analysts, investmentmanagers, and dealer-brokers, given the increasing interpenetration of capitalmarkets across the world. A number of internationally accepted ethical guidelines promotingintegrity, competence, and dignity within the financial community are open tothe voluntary adherence of Latin American and Caribbean practitioners. Organizationslike the Association for Investment Management and Research (A1MR), a professionalassociation of more than 100,000 investment practitioners and educators inover 100 countries, help sustain the highest standards of professional conduct to operateethically and in a manner that benefits clients and investors.This and similar initiativesthat foster professionalism and accountability in market agents are the mostfocused path for accelerating moral awareness and sensitivity in the financial marketsof Latin America and the Caribbean. AIMR members and nonmembers alike arebound to report questionable or unethical business practices of AIMR members, fosteringpeer control and the convergence of professional standards. 12 This addressesthe meso and individual levels.However, at the macro level, a more ambitious agenda should be pursued asa component of the still-pending second wave of structural reform in the region andeven as a new conditionality requisite, the introduction of ethical assessment studiesand audits as sine qua non elements for the approval of investment projects andcredit operations. 13 International financial organizations could be instrumental in advancingsuch an initiative, creating an additional systemic stabilizer that would go a longway toward fostering greater trust in the financial markets they serve.This will requirestrong leadership and may it be a virtuous instance of "soft power" in which OECDeconomies could exercise a lasting influence for the better on emerging markets (Nye2002). The Inter-American Development Bank, the Inter-American Investment Corporation,and the Multilateral Investment Fund, in particular, should have a pivotal rolein the implementation of these initiatives across the region, working with membercountry governments to promote the organization of ethical education at all levels as12 Prentice (2002) strongly believes, "Centers for the study of business ethics are necessary to represent the ideals towhich we aspire. But most business students will always view business ethics as hortatory rather than mandatory, asextra credit rather than required ... [Sjtrong judicial systems administering rigorous financial laws enable companiesto raise money more quickly and facilitate more efficient stock markets. Legitimate companies want laws that requireaccurate financial disclosure and rules that punish fraudulent firms."13 It is safe to predict that the beneficiaries of these measures, frequently immersed in crisis management situations,will be the first ones to oppose them, as yet a new set of hurdles to the disbursement of funds. All paths of changeare fraught with risk.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub