Essay Title: 

Banking system in Mexico

March 28, 2016 | Author: | Posted in history, latin-american studies

Running Head : Mexican Banking System

Mexican Banking System

[Author ‘s Name]

[Institution ‘s Name] The banking system in Mexico has been called one of the most developed in Latin America . It consists of a central bank and the remaining financial institutes typically fall into one of six essential categories of banks . The Public Development banks , the Public credit Institutions , Private Commercial Banks , Private Investment Banks Savings and Loan Associations , and Mortgage Banks . Apart from the financial institutes in these six categories , there are other certain activities that Mexican Banks [banner_entry_middle]

engage in such as securities market institutions , development trust funds , insurance companies , credit unions , factoring companies , mutual funds , and bonded warehouses While the six groups cover most of the financial system , these are other modules without which the financial system would be incomplete HYPERLINK “http /lcweb2 .loc .gov /cgi-bin /query /r ?frd /cstdy field (DOCID mx0063 http /lcweb2 .loc .gov /cgi-bin /query /r ?frd /cstdy field (DOCID mx0063 )The head of the Central Bank is Guillermo Ortiz . The central bank , the Bank of Mexico (Banco de Myxico , regulates the money supply and foreign exchange markets , sets reserve requirements for Mexican banks , and enforces credit controls . It serves as the fiscal agent of the federal government , the issuing bank for the new peso , and a discount house for private deposit banks . It supervises the private banking sector through the National Banking Commission , and it provides funds for government development programs ( HYPERLINK “http /lcweb2 .loc .gov /cgi-bin /query /r ?frd /cstdy field (DOCID mx0063 http /lcweb2 .loc .gov /cgi-bin /query /r ?frd /cstdy field (DOCID mx0063 )In the past three decades the Mexican Banking System has experienced a significant amount of instability . The main cause of it seems to be the nationalization of the banking system in the September of 1982 when the president of Mexico was Lupez Portillo . During that period , with the exception of Citibank , no other foreign bank was allowed to invest the government owned all the banks , even the commercial ones and this brought about limited development since there was next to no competition . Also in an attempt to improve the banking system ‘s efficiency the government merged several banks together and did away with twenty-two commercial banks

Then it was thought that the banks needed their financial freedom because the nationalization resulted in a banking system which was greatly controlled and regulated by the government . The beginning of the privatization of the Mexican banking system started in 1987 , but not much was essentially done the government returned 34 percent of the banks ‘ capital to private investors in the form of nonvoting stock It was in the June of 1991 that real privatization of the system had actually began . The major banks were sold to the country ‘s wealthy families at extraordinarily high premiums (2 to 4 times book value compa red with a U .S . average for bank mergers of about 1 .5 times . Such a rich purchase price premium required rapid revenue growth from ballooning loan portfolios… [banner_entry_footer]


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