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Foreign ownership in Mexican Banking: A Self- Correcting Phenomenon

Adrian Tschoegl ()

MPRA Paper from University Library of Munich, Germany

Abstract: Currently, foreign banks own the banks that hold about 80 percent of the assets in Mexican banks. The paper argues that this is the third instance in which foreign-owned banks have initially comprised a large part of the Mexican banking system, and that in the first two cases (1865-1910 and 1920-1935), the degree of foreign ownership will recede. The argument is that reform and competition among the banks will cause the conditions that attracted the foreign banks to erode and the domestic banks to be able to grow more rapidly. Therefore, in subsequent decades many foreigner owners are likely to sell their subsidiaries to local banks and investors. Thus over time the ratio of assets in foreign-owned banks to total banking system assets should decline, even in the absence of government policies that aim for that result.

Keywords: Mexico; foreign banks; ecological succession; banking history (search for similar items in EconPapers)
JEL-codes: G21 N26 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-ban and nep-his
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:586

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