Banking
From The Report: Mexico 2019
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Chastened by a credit boom and bust during the first half of the 1990s, the authorities have reformed, liberalised and privatised the banking sector while ensuring strong regulatory oversight and, in turn, relatively conservative lending practices. This explains, in part, the small size of the sector as well as the low levels of financial inclusion across the country. While the banking sector serves large corporations and the middle class relatively well, many smaller – and particularly informal – businesses struggle to access credit, and almost half of the 125.9m-strong population that lives in poverty have limited access to financial services. The authorities’ efforts to boost financial inclusion and improve financial literacy are beginning to bear fruit, however, with bank accounts becoming more ubiquitous and consumer credit levels picking up. This chapter contains an interview with Alejandro Díaz de León, Governor, Banco de México; and Carlos Serrano, Chief Economist, BBVA México.

Articles from this Chapter

Overview

Robust institution: Significant scope for long-term lending growth despite tighter monetary policy and slowing economic activity
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Since the last major financial crisis in 1994-95, Mexico has seen the emergence of a banking sector characterised by robust regulation, with high levels of capitalisation and profitability. While economic growth has slowed over the past half-decade and monetary policy has tightened in more recent years (see Economy chapter), credit growth remains robust, leading to an improved credit-to-GDP ratio. Nevertheless, Mexico’s banking sector remains small for a country of its size and economic development,…

Interview

Welcome adjustments: Alejandro Díaz de León, Governor, Banco de México, on countering uncertainties with sound policy
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Interview:Alejandro Díaz de León What internal and external factors contributed to Mexico’s economic slowdown, and what monetary policies can counterbalance their effects? ALEJANDRO DÍAZ DE LEÓN: The latest growth forecast from Banco de México (Banxico) estimates GDP growth to range between 0.2% and 0.7% for 2019, and between 1.5% and 2.5% in 2020. The forecast for 2019 reflects, in part, that during the first half of the year growth came in below expectations as a result of a weaker…

Analysis

A broad approach: New government financing package aims to boost access to credit in targeted populations and industries
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Despite occurring a quarter of a century ago, Mexico’s financial crisis of 1994-95 continues to cast a long shadow over the sector. As consumer and business confidence collapsed, so did bank credit as a share of GDP. Bankers and their regulators adopted and promoted much more conservative lending practices, resulting in many consumers and smaller businesses being locked out of the formal financial sector. At the same time, economic growth over the past two and a half decades has slowed significantly,…

Interview

New approaches: Carlos Serrano, Chief Economist, BBVA México, on moves to provide broader services and protect the financial system
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Interview:Carlos Serrano What regulatory measures need to be taken to boost competitiveness, ease access to credit and spur socio-economic growth? CARLOS SERRANO: Mexico has a strong regulatory framework, especially with regard to prudential regulation, which has enabled the continued expansion of credit, robust capital and liquidity positions, as well as the entry of new agents. Nevertheless, there is always room for improvement, particularly with easing access to credit and spurring socio-economic…