DEREGULATION, LIBERALIZATION AND CONSOLIDATION OF THE MEXICAN BANKING SYSTEM: EFFECTS ON COMPETITION

Liliana Solís () and Joaquin Maudos ()
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Liliana Solís: Universitat de València

Working Papers. Serie EC from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: This paper analyses the evolution of competition in the Mexican banking system in the period 1993-2005, a period of deregulation, liberalization and consolidation of the sector. For this purpose we use two indicators of competition from the theory of industrial organization (the Lerner index and the Panzar and Rosse´s H-statistic). The empirical evidence does not permit us to reject the existence of monopolistic competition. The Lerner index shows a decrease in competitive rivalry in the deposit market and an increase in the loan market, a cross subsidization strategy being observed. The results obtained call into question the effectiveness of the measures implemented hitherto, aimed at increasing the competitiveness of the Mexican banking system. Este artículo analiza la evolución de la competencia en el sistema bancario Mexicano en el periodo 1993-2005, periodo de desregulación, liberalización y consolidación del sector. Para ello se utilizan dos medidas de competencia derivadas de la teoría de la Organización Industrial: el índice de Lerner y el estadístico H de Panzar y Rosse. La evidencia empírica no permite rechazar la existencia de competencia monopolística. El índice de Lerner muestra una disminución en la rivalidad competitiva en el mercado de los depósitos y un incremento en el mercado de los préstamos, observándose una estrategia de subsidiación cruzada entre ambos mercados. Los resultados obtenidos cuestionan la efectividad de las medidas hasta ahora implementadas dirigidas a incrementar la competencia en la banca Mexicana.

Keywords: banca; competencia; desregulación banking; competition; deregulation (search for similar items in EconPapers)
JEL-codes: G21 L10 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2007-12
New Economics Papers: this item is included in nep-ban and nep-com
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Deregulation, liberalization and consolidation of the Mexican banking system: Effects on competition (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasec:2007-13

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