Journal Article

Liberalization, privatization, and crash: Mexico's banking system in the 1990's

Abstract: Although Mexico's 1994 peso devaluation and subsequent capital outflows shook the nation's banking system, the foundations of the banking crisis were laid much earlier. ; Econometric evidence suggests that in the wake of the 1991-92 bank privatizations, Mexico's banks entered a market share struggle in which they incurred short-term losses at the margin, perhaps in the interests of greater expected gains over the long term. ; Euphoric investor behavior and a rising economy may have aggravated the situation by making risky borrowers more difficult to identify.

Keywords: Mexico; Devaluation of currency; Peso, Mexican;

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Economic and Financial Policy Review

Publication Date: 1997

Issue: Q I

Pages: 21-30