CEPAL Review

Cepal Review is the leading journal for the study of economic and social development issues in Latin America and the Caribbean. Edited by the Economic Commission for Latin America, each issue focuses on economic trends, industrialization, income distribution, technological development and monetary systems, as well as the implementation of economic reform and transfer of technology. Written in English and Spanish (Revista de la Cepal), each tri-annual issue offers approximately 12 studies and essays undertaken by authoritative experts or gathered from conference proceedings.

English Spanish

Foreign banks in Latin America: A paradoxical result

During the 1890s there was a dramatic increase in the presence of foreign banking in Latin America. Macroeconomic stability and economic reforms, especially capital market and financial liberalization, created attractive conditions for banks which were looking for economies of scale and worldwide growth. At the same time governments hoped that foreign bank penetration would provide a solution to the need to increase capital within the system, as well as representing an insurance against systemic risk. The efforts to attract foreign investment coincided with the strategy of the leading players to become global banks. Now that the initial penetration has been achieved, it is worth analyzing what the impacts have been on the performance of the financial system. The main conclusion is that there has been a positive outcome for the region in terms of microeconomic efficiency, but this contrasts with the macroeconomic impact.

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