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Financial infrastructure is the underlying foundation of a country’s financial system. It is comprised of all institutions, information, technologies, rules, and standards which enable financial intermediation. The quality of a country’s financial infrastructure determines the efficiency of intermediation, the ability of lenders to evaluate risk and of borrowers to obtain credit, insurance, and other financial products at competitive terms. This report covers two dimensions of Jamaica’s financial infrastructure: 1) payments, remittances, and securities settlement systems, and; 2) credit reporting systems. This technical note does not provide a detailed assessment of individual payments system in the form of a Report on Observance of Standards and Codes (ROSC), but uses the framework of international standards for carrying out a detailed analysis of the existing systems in Jamaica, including the Committee on Payment and Settlement Systems (CPSS) and International Organization of Securities Commissions (IOSCO) Principles for Financial Markets Infrastructure (PFMIs), the CPSS General Guidance for National Payment System Development, the CPSS-World Bank General Principles on International Remittance Services (GPs), the World Bank General Principles for credit reporting and related methodologies. The information used in the assessment includes relevant national laws, regulations, rules and procedures governing the systems and other available material.

This paper presents a simple model in which credit-constrained firms might delay the adoption of new and more productive technologies because of the external financing costs involved. Applying for a loan can be a very costly process by itself. Where there is a high degree of credit rationing, these costs might even deter entrepreneurs from applying for a loan altogether. We argue that the efficiency of the banking system, by affecting such costs, can influence the profitability of new technologies and entrepreneur's investment decisions, which, in turn, influence new technology implementation, capital accumulation and growth.

The paper presents a model in which credit-constrained firms might delay the adoption of new and more productive technologies because of the very high external financing costs they face. Our point of departure is that the efficiency of the banking system can have a profound impact on real resource and investment allocation not only directly, by reducing the amount of resources channelled to the credit market, but also indirectly by affecting entrepreneurs’ investment decisions. Along these lines of reasoning we develop a model of information asymmetries in the credit market in which high costs of processing bank loan applications might obstruct investments in high-tech projects and favour, instead, low-return, self-financed investments in mature sectors. The result is that these kinds of costs have a negative impact on the average capital productivity and on the rate of economic growth. In specific circumstances, the combination of these.