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Morgan Stanley: Argentina capital market reform could drive credit growth

The reform of Argentina's capital markets law could push credit to grow 13x over the next 10 years, El Cronista reported, citing research from Morgan Stanley.

The investment bank said the reform will boost access to financing for both small and medium-sized companies and real estate projects while allowing the domestic capital market to develop deeper and expand.

Morgan Stanley added that it is essential that norms be set for the securitization of the banks' portfolios and the risk be transferred to other market participants, so that entities can continue to lend.

Due to the ability of credit to drive or destroy an economy, the bank points out that the reform can lead to a virtuous cycle. Expanding access to credit will aid in the normalization of the country's macroeconomic condition, the investment bank noted.

In addition, the reform will aid in rebuilding the local asset management industry after pension funds were nationalized in 2008, Morgan Stanley said.