Abstract/Details

Financial liberalization in Mexico, 1989-1993


1997 1997

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Abstract (summary)

Mexico liberalized its banking system in 1989 and 1990 and privatized it from mid-1991 to mid-1992. This study first sets those institutional changes in the context of past Mexican financial development, examining the role of the financial sector in achieving macro balance and demonstrating the close relationship between changes in fiscal policy during the 1980's and financial liberalization.

Next it examines the behavior of the banking sector and of the larger individual banks during the 1989-1993 period, arguing that especially after privatization these institutions behaved in risk-seeking ways that sought short-term profits at the expense of long-term viability. A remarkable part of this search for near-term profit was the very rapid expansion of consumer lending.

The dissertation then turns to the behavior of the large private firms listed on the stock exchange, with particular attention to their rapid accumulation of dollar-denominated debt and peso-earning liabilities. It is argued that both bank lending and patterns of investment by firms were skewed to the nontraded sectors, which can certainly be attributed to the way that the pegged exchange shifted relative prices against traded goods, but which is nonetheless difficult to defend as a long-term strategy. These firms may have expected the kind of post-devaluation bailouts they received after the 1982 crisis.

Finally these investigations are brought together to examine the macroeconomic coherence of Mexican government policy, and to root the failures of the liberalization process in the country's political economy. Orthodox financial liberalization theory is shown to make institutional assumptions about the real economy, and particularly about the behavior of large firms, that may not be warranted. If these assumptions do not hold financial liberalization may damage growth and stability.

Indexing (details)


Subject
Banking;
Finance;
Public administration
Classification
0770: Banking
0508: Finance
0617: Public administration
Identifier / keyword
Social sciences, fiscal policy, investing
Title
Financial liberalization in Mexico, 1989-1993
Author
Danby, Colin
Number of pages
203
Publication year
1997
Degree date
1997
School code
0118
Source
DAI-A 58/09, Dissertation Abstracts International
Place of publication
Ann Arbor
Country of publication
United States
ISBN
9780591598001, 0591598000
Advisor
Rao, J. Mohan
University/institution
University of Massachusetts Amherst
University location
United States -- Massachusetts
Degree
Ph.D.
Source type
Dissertations & Theses
Language
English
Document type
Dissertation/Thesis
Dissertation/thesis number
9809324
ProQuest document ID
304353829
Copyright
Database copyright ProQuest LLC; ProQuest does not claim copyright in the individual underlying works.
Document URL
http://search.proquest.com/docview/304353829
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