ABSTRACT
This chapter provides the basic indicators to describe the evolution of the financial system since the mid 1980s. It discusses the main features of the Chilean financial markets are analyzed, emphasizing the role that different financial institutions play in the process of short and long term financing of companies and investment projects. The chapter outlines some challenges that financial markets in Chile may face in the future. The view that financial markets can play a significant role in promoting economic growth and development seems to be increasingly shared. The rise in corporate bond issuances in the domestic market in the last years was also related to the increasing risk premiums demanded in international markets and the lower real interest rates observed in the local market. International financial integration can have positive effects for a small economy as it can contribute to expanding business operations, deepening domestic financial markets and strengthening capacity for absorbing external macroeconomic shocks.
