What is it about?
Economic and political developments favored the privatization of the banking industry in Mexico, after one decade of State ownership. This process favored the concentration of the industry. At the same time, macroeconomic conditions (a harsh devaluation of the currency and a serious inflationary process) forced the government to allow foreign investors willing to takeover many of the recently privatized banks. That decade was a game changer for Mexico's banks.
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Why is it important?
The Mexican experience of privatization, bankruptcy and internationalization of domestic banks proves that even under very stressful conditions, structural changes can be guided for the best.
Perspectives
The Mexican banks expropriation in 1982 and their later re privatization illustrate once again that governments should not aim to participate in the productive activities of a country. Government administrators are, according to economic history, not good administrators. Furthermore, an industry that was traumatized by the expropriation experience became fragile and lacked the management experience to survive the 1994 MXN devaluation. A costly lesson, hopefully for good.
Doctor Roberto Joaquín Santillán-Salgado
Instituto Tecnologico y de Estudios Superiores de Monterrey
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This page is a summary of: CONCENTRATION AND INTERNATIONALIZATION OF THE MEXICAN BANKING SECTOR, Emerald,
DOI: 10.1016/s1569-3767(05)05010-7.
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