Can Fintech Foster Competition in the Banking System in Latin America and the Caribbean?

Pablo Bejar, Kotaro Ishi, Takuji Komatsuzaki, Ippei Shibata, Jasmin Sin and Suchanan Tambunlertchai

Latin American Journal of Central Banking (previously Monetaria), 2022, vol. 3, issue 2

Abstract: This paper revisits the competitive environment of the banking system in Latin America and the Caribbean and investigates the early impact of fintech development in the region thus far. Against the backdrop of high net interest margins (NIMs) and limited financial depth in the region, panel regressions broadly confirm the results of existing literature on the association of NIMs with the changes in financial sector structure, including market concentration, administrative costs, and foreign banks, although differences between domestic and foreign banks narrowed after the 2008-09 global financial crisis. Difference-in-difference regressions and case studies on Brazil and Mexico suggest that fintech is associated with reductions in NIMs and defensive responses by incumbent banks, both of which benefit consumers. The case studies also shed light on regulatory approaches and prudential considerations in fostering financial innovation and banking sector competition.

Keywords: Banking; Competition; Fintech; Latin America and the Caribbean (search for similar items in EconPapers)
JEL-codes: D4 G21 L11 N26 O31 O38 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Can Fintech Foster Competition in the Banking System in Latin America and the Caribbean? (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:lajcba:v:3:y:2022:i:2:s2666143822000163

DOI: 10.1016/j.latcb.2022.100061

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