Financial Deepening in Mexico

• Authors: Alexander Herman , Alexander Klemm

Abstracts

EN

International comparisons reveal that – even controlling for a host of explanatory factors – credit depth is exceptionally low in Mexico. Using panel data methods linking credit growth and fundamentals, this paper estimates a long-term gap between actual and expected credit of about 40 percent of GDP. Possible explanations include the history of banking crises, the large informal sector and an inefficient legal system. Using a disequilibrium regression approach, this paper also finds that supply factors are particularly important as determinants of credit in Mexico. Recent financial reforms address many of the supply constraints, but their success will depend on implementation. The main challenge going forward will be to support financial deepening, while limiting risks to financial stability.

Keywords

EN

Mexico; credit gap; credit growth; financial development

• Publisher: Uniwersytet Warszawski. Wydawnictwo Naukowe Wydziału Zarządzania
• Journal: Journal of Banking and Financial Economics
• Year: 2019
• Issue: 1(11)
• Pages: 5-18

Dates

published

2019

Contributors

author

Alexander Herman

• U.S. Department of Treasury, Office of International Affairs

author

Alexander Klemm

• International Monetary Fund

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Identifiers

DOI

10.7172/2353-6845.jbfe.2019.1.1

Biblioteka Nauki

2040976