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Deregulation, Liberalization And Consolidation Of The Mexican Banking System: Effects On Competition

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  • Liliana Solís

    ()
    (Universitat de València)

  • Joaquín Maudos Villarroya

    (Instituto Valenciano de Investigaciones Económicas)

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.

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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 2007-13.

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Length: 33 pages
Date of creation: Dec 2007
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasec:2007-13

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Keywords: banca; competencia; desregulación banking; competition; deregulation;

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References

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  1. Stijn Claessens & Luc Laeven, 2004. "What drives bank competition? Some international evidence," Proceedings, Federal Reserve Bank of Cleveland, pages 563-592.
  2. Gruben, William C. & McComb, Robert P., 2003. "Privatization, competition, and supercompetition in the Mexican commercial banking system," Journal of Banking & Finance, Elsevier, vol. 27(2), pages 229-249, February.
  3. Bikker, Jacob A. & Haaf, Katharina, 2002. "Competition, concentration and their relationship: An empirical analysis of the banking industry," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2191-2214, November.
  4. Maudos, Joaquin & Solisa, Liliana, 2009. "The determinants of net interest income in the Mexican banking system: an integrated model," MPRA Paper 15257, University Library of Munich, Germany, revised 2009.
  5. Juan Fernández de Guevara & Joaquín Maudos & Francisco Pérez, 2005. "Market Power in European Banking Sectors," Journal of Financial Services Research, Springer, vol. 27(2), pages 109-137, April.
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  22. Solís, Liliana & Maudos, Joaquín, 2008. "The social costs of bank market power: Evidence from Mexico," Journal of Comparative Economics, Elsevier, vol. 36(3), pages 467-488, September.
  23. Carbo Valverde, Santiago & Fernández de Guevara y Rodoselovics, Juan & Humphrey, David & Maudos, Joaquin, 2009. "Estimating the intensity of price and non-price competition in banking," MPRA Paper 17612, University Library of Munich, Germany, revised 2009.
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Citations

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Cited by:
  1. Maudos, Joaquin & Solisa, Liliana, 2009. "The determinants of net interest income in the Mexican banking system: an integrated model," MPRA Paper 15257, University Library of Munich, Germany, revised 2009.
  2. Georgios Efthyvoulou & Canan Yildirim, 2013. "Market Power in CEE Banking Sectors and the Impact of the Global Financial Crisis," CASE Network Studies and Analyses 0452, CASE-Center for Social and Economic Research.
  3. Barros, Carlos Pestana & Wanke, Peter, 2014. "Banking efficiency in Brazil," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 28(C), pages 54-65.
  4. Solís, Liliana & Maudos, Joaquín, 2008. "The social costs of bank market power: Evidence from Mexico," Journal of Comparative Economics, Elsevier, vol. 36(3), pages 467-488, September.
  5. Barros, Carlos Pestana & Williams, Jonathan, 2013. "The random parameters stochastic frontier cost function and the effectiveness of public policy: Evidence from bank restructuring in Mexico," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 98-108.

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