Clark W. Reynolds
The experience of the Japanese main bank system provides a useful optic from which to view the role of banking in a developing country such as Mexico, illustrating how the specific structure of relations between financial intermediaries and non-financial enterprises can have an important impact on the efficiency, stability and growth of the real economy. The comparative institutional analysis approach used in this paper offers a framework permitting a complementary finance and development analysis by focusing on the microfoundations of real and financial sector decision-making in the context of evolving macroeconomic policies, market conditions and institutions. It is also possible to go beyond questions of ownership and control to issues of monitoring, allocative efficiency and stability of real-financial relationships under a range of institutional structures.
The Mexican model provides a useful case study of the role of institutions in the building of microfoundations of banking and financial relations in developing countries. The need for such countries to undertake institutional reforms to enhance their competitiveness and increase their rates of saving, investment and social participation in the development process, even while safeguarding their unique domestic character, gives a wide applicability to the Mexican experience.
Mexico is interesting because it also provides an example of the evolution from a closely held financial system linked to family and enterprise groups, to a state-owned banking system, to one in which ownership has reverted to the private sector—but on a more diversified basis and with important additional elements of regional supervision—all in about a decade. This chapter seeks to clarify the way in which the financial organizational structure has evolved and is operating in a developing and transforming economy that faces increased exposure to the international market.