Economic Research in a Financial Group in Mexico

Article excerpt

There is widespread agreement on the issues that define the role of an economic research department in a financial institution. At Banamex, we summarize it as "detecting risks and opportunities," a task that extends to all the functions and responsibilities of the financial group. This is a mission that fulfills several purposes simultaneously. The first thing--and perhaps the most important thing--is preparing the bank to understand, adapt itself to, and/or react to the environment in which it operates. Another aim, which is also frequently mentioned, is acting as an additional tool for the sales force, in public relations with clients and investors, and lobbying with authorities and political groups.

A profound knowledge of the economic and business situation is always a good asset for positioning one's own business strategically, as well as advertising the bank's capacity, its potential, and its influence. Thus, we have internal and external "customers" for research: the second group seeking advice and insight, the first seeking strategic inputs for anticipating the future.

I think these characteristics apply to all economists working in the financial sector. There will be important differences, relevant nuances, or particular situations; but, in general, these characterizations provide a referential framework for all economists in the financial industry. The nuances and particular situations will be determined by the peculiarities of the intermediary, by the size of its capital, the concentration of its activities, the structure of its assets and liabilities, as well as its niches, segments, or specific vocation. It is these differences that mark the specific styles of economic analysis--from an orientation that is very specialized in sectors or financial markets (as in an investment bank) to issues of valuation of potential markets, such as mortgage markets in a particular region (as in a commercial bank).

What particular situations apply in my case? Where are the main differences from similar research units in the industry? Which aspects of my duties will other colleagues from the discipline find most interesting?

There are several, and they are associated with the three fundamental features of my situation:

* the "environment" we study (basically Mexico, but also Latin America);

* the financial intermediary I work for (Banamex, a financial group operating in all the relevant services of the financial industry with a significant share of the Mexican market);

* the functions expected from the economic research department, as well as my personal involvement with Banamex, which began more than 25 years ago.

Together, these three elements form "a particular situation" that is not necessarily shared by similar research groups in the United States.

Some background is necessary here. It is important first of all to outline the particularities of the main target of analysis, which in my case is Mexico; of the ones associated with Banamex, the Financial Group I work with; and of those arising from the work done in the research area and my personal experience with Banamex. The combination of these particularities make up, I believe, a reality distinct from similar teams in the United States and Canada.

Mexico: a Stable, Uneven. and Slow-Growing Economy and a Young Democracy

The Mexican economy differs in many ways from other economies around the world. However, that does not make it very different in terms of economic analysis. An assessment of macroeconomic conditions, for example, requires an evaluation of fiscal and monetary conditions that has to be done whatever country is being analyzed. Of course, such analysis will differ--and significantly--due to the specific state of a country's fiscal and monetary situation. In the case of Mexico, several features make it a unique case. It is a country that has only recently consolidated its macroeconomic stability, has achieved a successful adaptation to globalization through a trade agreement with North America (with deep sectoral implications), and is starting to develop internal growth engines. …