Latin American Capital Markets

DEVELOPING CAPITAL MARKETS—ETHICAL ISSUES 429well as the introduction of ethical assessment studies and audits.14 In the long run, thiscould also help give rational form to the frequent demands for transparency and dueprocess in the establishment of credit and investment conditionality.For better or worse, as the mass media is making painfully evident on a dailybasis, better regulation, enhanced supervision, self-regulation, and corporate internaland external control processes may still fail to offer sufficiently strong incentives tomaximize ethical behavior. In these cases, capital markets remain a powerful, disinterestedcheck on the actions of corporate management and administration alike, forminga court of last resort on behalf of investors and lenders (Chaplinsky 1997). Inother words, in Latin America and the Caribbean as much as in the consolidated capitalmarkets of industrial countries, beyond sound legal frameworks, responsible professionalintermediation, and peer supervision, the greatest protector of investor interestin the long run may well be market freedom itself, that is, a culture of freedomand responsibility.ConclusionThe discussion provides some answers to the questions posed in the introduction.First, the capital markets of Latin America and the Caribbean need better supervision,rules, standards, and levels of professionalism; addressing these issues is vital to fosteringgrowth and consolidation. Second, consistently addressing macroeconomic fundamentalsin a coherent manner would provide the right incentives for building trustin capital markets, although this alone would not be sufficient.Third, ethical impedimentscould be addressed through a mix of ethical instruction and the practice of theright values. And fourth, for permanent solutions to fully germinate, many years ofpersistent effort are required at the collective, group, and individual level, and inter-14 The sources for the study and discussion of business ethics are numerous and tested by time, including the publicationsBusiness Ethics, Business Ethics Quarterly, Business and Professional Ethics journal, Business and Society, Internationa/Journalof Value-based Management, and Journal of Business Ethics. Most research centers and societies belong touniversities, like the Olsson Center for Applied Ethics (established at the University of Virginia in 1966), the Centerfor Business Ethics (Bentley College), the Society for Business Ethics (Loyola University, Chicago), the Center for Ethicsand Corporate Policy (Loyola Marymount University), the International Society of Business, Economics, and Ethics, andthe Center for Ethics and Religious Values in Business (both at the University of Notre Dame). Other centers andassociations are independent, such as the Ethics Resource Center (Washington, D.C.), the Institute for the Studyof Business Values (Hong Kong), and the Westminster Institute for Ethics and Human Values (London). Many areoriented toward specific professions, like the Program in Ethics and Professions (Harvard University) and the Centerfor the Study of Ethics and Behavior in Accounting (State University of New York, Binghamton).Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub