Credit Stagnation in Latin America

Adolfo Barajas and Roberto Steiner

No 2002/053, IMF Working Papers from International Monetary Fund

Abstract: This study examines the recent marked slowdown in bank credit to the private sector in Latin America. Based on the study of eight countries (Argentina, Bolivia, Brazil, Chile, Colombia, Peru, Mexico, and Venezuela), the magnitude of the slowdown is documented, comparing it to historical behavior and to slowdown episodes in other regions of the world. Second, changes in bank balance sheets are examined to determine whether the credit slowdown is merely a reflection of a slowdown in bank deposits, or whether the asset side has changed. Third, following an econometric disequilibrium approach used in recent studies of credit slowdowns in East Asia and Finland, the paper investigates possible causes for the slowdown in three countries: Colombia, Mexico, and Peru. While both supply and demand factors appear to have played key roles, their relative importance has varied across countries.

Keywords: WP; credit growth; central bank; credit slowdown; net credit; credit; banking system; Latin America; money bank; credit contraction; Bank credit; Credit booms; Loans; Credit risk; East Asia (search for similar items in EconPapers)
Pages: 49
Date: 2002-03-01
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Citations: View citations in EconPapers (68)

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