Financial Deepening in Mexico
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 GD...
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| Format: | Article |
| Language: | English |
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University of Warsaw
2019-01-01
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| Series: | Journal of Banking and Financial Economics |
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| Online Access: | https://press.wz.uw.edu.pl/cgi/viewcontent.cgi?article=1045&context=jbfe |
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| _version_ | 1841562454779232256 |
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| author | Alexander Herman Alexander Klemm |
| author_facet | Alexander Herman Alexander Klemm |
| author_sort | Alexander Herman |
| collection | DOAJ |
| description | 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. |
| format | Article |
| id | doaj-art-438f2b689d874117a3c45a56797dd14b |
| institution | Kabale University |
| issn | 2353-6845 |
| language | English |
| publishDate | 2019-01-01 |
| publisher | University of Warsaw |
| record_format | Article |
| series | Journal of Banking and Financial Economics |
| spelling | doaj-art-438f2b689d874117a3c45a56797dd14b2025-01-03T00:54:43ZengUniversity of WarsawJournal of Banking and Financial Economics2353-68452019-01-012019151810.7172/2353-6845.jbfe.2019.1.1Financial Deepening in MexicoAlexander Herman0Alexander Klemm1U.S. Department of Treasury, Office of International AffairsInternational Monetary FundInternational 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.https://press.wz.uw.edu.pl/cgi/viewcontent.cgi?article=1045&context=jbfemexicocredit gapcredit growthfinancial development |
| spellingShingle | Alexander Herman Alexander Klemm Financial Deepening in Mexico Journal of Banking and Financial Economics mexico credit gap credit growth financial development |
| title | Financial Deepening in Mexico |
| title_full | Financial Deepening in Mexico |
| title_fullStr | Financial Deepening in Mexico |
| title_full_unstemmed | Financial Deepening in Mexico |
| title_short | Financial Deepening in Mexico |
| title_sort | financial deepening in mexico |
| topic | mexico credit gap credit growth financial development |
| url | https://press.wz.uw.edu.pl/cgi/viewcontent.cgi?article=1045&context=jbfe |
| work_keys_str_mv | AT alexanderherman financialdeepeninginmexico AT alexanderklemm financialdeepeninginmexico |