emerging market clarity

pokhim

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CFAI mock 2015 PM Q24.
‘Emerging markets offer less protections from interference by the executive branch than do developed markets’
What does this statement even mean?…. What is executive branch?..
 
Executive power?
From Curriculum
Emerging market countries frequently do not offer the degree of transparency, court-tested laws, and clear regulations that developed market countries do. The legal system may be less developed and offer less protection from interference by the executive branch than in developed countries. Also, developing countries have tended to over borrow, which can damage the position of existing debt. If a default of sovereign debt occurs, recovery against sovereign states can be very difficult. Also, little standardization of covenants exists among various emerging market issuers. Sovereign debt also typically lacks an enforceable seniority structure, in contrast to private debt.
 
Legislative creates the rules, judical interrupts the rules, executive branch enforces.
An aggressive executive branch could seize assets, create new taxes an generally be inconsistent which is a negative for finance.
 
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