Mexico’s experiments with bank privatization and liberalization, 1991–2003

Haber, Stephen

doi:10.1016/j.jbankfin.2005.03.017

Cited by 145 publications

(92 citation statements)

References 16 publications

(16 reference statements)

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“…Some argue that it is primarily the rich and politically connected who would benefit from improvements in the financial system (Haber 2004). As such, greater financial development may only succeed in channeling more capital to a select few.…”

Section: The Direct Channel Through Access To Financial Servicesmentioning

confidence: 99%

Financial Sector Development, Economic Growth, and Poverty Reduction: A Literature Review

Zhuang¹,

Gunatilake

Niimi

et al. 2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The views expressed in this paper are those of the author(s) and do not necessarily reflect the views or policies of the Asian Development Bank. Terms of use: Documents inThe ADB Economics Working Paper Series is a forum for stimulating discussion and eliciting feedback on ongoing and recently completed research and policy studies undertaken by the Asian Development Bank (ADB) staff, consultants, or resource persons. The series deals with key economic and development problems, particularly those facing the Asia and Pacific region; as well as conceptual, analytical, or methodological issues relating to project/program economic analysis, and statistical data and measurement. The series aims to enhance the knowledge on Asia's development and policy challenges; strengthen analytical rigor and quality of ADB's country partnership strategies, and its subregional and country operations; and improve the quality and availability of statistical data and development indicators for monitoring development effectiveness.

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Section: The Direct Channel Through Access To Financial Servicesmentioning

confidence: 99%

Financial Sector Development, Economic Growth, and Poverty Reduction: A Literature Review

Zhuang¹,

Gunatilake

Niimi

et al. 2009

SSRN Journal

View full text Add to dashboard Cite

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“…Stronger efficiency gains are observed when foreign ownership is high, and for firms that restructure. On the other hand, evidence from Mexico, showed that privatization outcomes were "bad enough to prompt re-nationalization of the banking sector in the wake of the Tequila crisis" (Haber, 2005). In the Czech Republic, and Poland, bank privatization, "were not fully successful" (Bonin, Hasan & Wachtel, 2005).…”

Section: Resultsmentioning

confidence: 99%

Privatization and Financial Performance in Developing Countries: Reality and Myth

Ali¹

2014

IJBM

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During the 1980s, the pendulum swung back from the socialism doctrinaire that dominated the post war period, where public ownership of the productive and services sectors was emphasized. In the early 1980s, new values emerged questioning the role of the state in economic activities. As a result, the pressures mounted to shift to market economy and to rely on private initiatives to spearhead the development process.Accordingly, governments around the globe, including communist countries, announced their intentions to "rolling back the frontiers of the state". The unsatisfactory performance of public enterprises, it was argued, is a direct consequence of their ownership structure. Therefore, the only enduring remedy that emerged was to change ownership.In this paper we assess the efficiency arguments for and against privatization with emphasis on developing countries. It is here argued that the poor performance of public enterprises is due to market structure and lack of clear objectives rather than structure of ownership. Moreover, although there is evidence that privatized firms have improved, we assert that the claimed improvement is difficult to measure, due to the major restructuring that were carried out before privatization to prepare the candidates in order to ensure success of the policy and the change of environment within which they operate. These methodological problems make such comparison before and after at least a protracted and complicated business and the results highly debatable.

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“…In a further set of reforms enacted in 1941, the government forced commercial banks to divest their investment banking operations into separate corporations, called Financieras. (Del Angel Mobarak, 2002, 2005.…”

Section: Tenuous At the Originmentioning

confidence: 99%

These <I>Are</I> the Good Old Days: Foreign Entry and the Mexican Banking System

Haber

Musacchio

2013

SSRN Journal

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In 1997, the Mexican government reversed long-standing policies and allowed foreign banks to purchase Mexico's largest commercial banks and relaxed restrictions on the founding of new, foreign-owned banks. The result has been a dramatic shift in the ownership structure of Mexico's banks. For instance, while in 1991 only one percent of bank assets in Mexico were foreign owned, today they control 74 percent of assets. In no other country in the world has the penetration of foreign banks been as rapid or as far-reaching as in Mexico.In this work we examine some of the important implications of foreign bank entry for social welfare in Mexico. Did liberalization lead to an increase (or decrease) in the supply of credit?Did liberalization lead to an increase (or decrease) in the cost of credit? Did liberalization lead to an increase (or decrease) in the stability of the banking system?In order to answer these questions, we must first ask, -increase (or decrease), measured on what basis?‖ There are, in fact, two distinct conceptual frameworks through which one can assess the impact of foreign bank entry. One is concerned with measuring the short-run impacts of foreign entry on credit abundance, pricing, and observable stability using reduced form regressions. The other is an institutional economics conception of how to measure performance. It is focused on understanding whether foreign entry gave rise to difficult-to-reverse changes in the political economy of bank regulation, which will affect competition and stability in the long term, outside the period that may be observed empirically. We employ both conceptions in this paper. 3When we look at the impact of foreign entry using econometrics, the evidence strongly indicates that Mexico's banking system is now much more stable. The ratio of nonperforming loans has declined dramatically, while equity ratios have increased. System stability does not appear to have come at the cost of a decrease in the availability of credit. In fact, credit to firms and households has increased in real terms. System stability also does not appear to have come at the cost of higher priced credit. In fact, the evidence suggests that foreign banks charge lower interest spreads than domestically-owned banks.When we take a broader, political economy view of the impact of foreign bank entry in Mexico, the evidence indicates that there if there ever was a -good old days‖ of Mexican banking, in which credit was abundant and the system was stable, we are in it. From the 1920s through the 1960s the Mexican banking system was stable, but it provided very modest amounts of credit to firms and households. Moreover, the stability of the system may have been an artifact of the ability of commercial banks to shift risk to government-owned development banks, which is to say that risk was quietly shifted to taxpayers. The banking system that existed in Mexico from the 1970s until 1997 was characterized by periods of rapid credit growth, followed by devastating busts, the aftermaths of which were characte...

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Mexico’s experiments with bank privatization and liberalization, 1991–2003

Cited by 145 publications

References 16 publications

Financial Sector Development, Economic Growth, and Poverty Reduction: A Literature Review

Financial Sector Development, Economic Growth, and Poverty Reduction: A Literature Review

Privatization and Financial Performance in Developing Countries: Reality and Myth

These <I>Are</I> the Good Old Days: Foreign Entry and the Mexican Banking System

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