Importancia de la Banca en México

Abstract

The objective of the study was to analyze the importance of banking in Mexico. The banking system in Mexico is the result of a complex transformation of processes as deregulation, expansion, crisis, nationalization, foreign ownership and privatization. In 1983, commercial banks were transformed into national credit; later, in 1985 with the purpose of rationalize and optimize their operations, their number decreased. Since 1988 the country began a process of economic and financial reform. Gradually, selective credit drawers were removed and interest rates (Solis, 1997) were liberalized. Between 1991 and 1992, the 18 banks which had hitherto belonged to the government were divested. For some experts, the privatization mechanism was inappropriate because it benefited brokerage firms that, in some cases, were property of former directors of the commercial banks. In addition, the newly privatized banks took advantage of the inadequate regulation and supervision to foster an excessive increase in credit (above the real dynamics of the economy), joined to the precarious risk assessment practices and technological underdevelopment in the banking sector at that time (De la Cruz and Alcántara, 2011). Two years later, in 1994, capital outflows and currency imbalances were consequence of political events that contaminated the economic environment at the time, which significantly reduced the market liquidity. This was worsened by the issuance of short-term government bonds denominated in dollars and free convertibility, which caused a rapid decline of international reserves and an economic crisis. Both the crisis and the devaluation of the currency (in December 1994) increased the bank nonperforming loans (NPLs). In addition, rising interest rates and higher unemployment, exacerbated the breach of obligations of debtors, causing serious problems in the banking sector, forcing the government to speed up the entry of foreign capital into the sector with the aim to find alternative sources of funding (Clavellina, 2013).