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Financing of the private sector in Mexico, 2000-05 : evolution, composition, and determinants

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  • Stephanou, Constantinos
  • Munoz, Emanuel Salinas

Abstract

The objective of this paper is to describe the evolution, composition, and determinants of financing to the nonfinancial private sector in Mexico between 2000 and 2005. Supported by the macroeconomic environment and financial system reforms, total financing to the private sector (particularly consumer credit) increased relative to GDP, while accessibilityand affordability generally improved. Equity issuance did not play an important role during the period under consideration. Although the supply of financing shifted toward domestic nonbank providers, commercial banks remain the primary source of funding. Significant progress was made in cleaning up bank loan portfolios and in strengthening financial system soundness and infrastructure. The prospects for continued private sector financing growth remain very positive, but financing is not spread out evenly across all market segments. The authors conclude with some policy implications to further facilitate deeper and broader financing of the private sector.

Suggested Citation

  • Stephanou, Constantinos & Munoz, Emanuel Salinas, 2007. "Financing of the private sector in Mexico, 2000-05 : evolution, composition, and determinants," Policy Research Working Paper Series 4264, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4264
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    References listed on IDEAS

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    1. Aaron Tornell & Frank Westermann & Lorenza Martinez, 2004. "NAFTA and Mexico's Less-Than-Stellar Performance," NBER Working Papers 10289, National Bureau of Economic Research, Inc.
    2. Zervos, Sara, 2004. "The transactions costs of primary market issuance : the case of Brazil, Chile, and Mexico," Policy Research Working Paper Series 3424, The World Bank.
    3. World Bank & International Finance Corporation, "undated". "Doing Business in Mexico," World Bank Publications - Reports 13429, The World Bank Group.
    4. Aaron Tornell & Frank Westermann & Lorenza Martínez, 2004. "NAFTA and Mexico's Economic Performance," CESifo Working Paper Series 1155, CESifo.
    5. Beck, Thorsten & Demirguc-Kunt, Asli, 2006. "Small and medium-size enterprises: Access to finance as a growth constraint," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2931-2943, November.
    6. World Bank & International Finance Corporation, "undated". "Doing Business in Mexico," World Bank Publications - Reports 13430, The World Bank Group.
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    Cited by:

    1. Santos, Gisler Andre & Sheng, Hsia Hua & Bortoluzzo, Adriana, 2012. "The Use of Trade Credit by Firms: Evidence for Latin America," Insper Working Papers wpe_277, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.

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    Keywords

    Banks&Banking Reform; Financial Intermediation; Economic Theory&Research; Public Sector Economics&Finance; Financial Crisis Management&Restructuring;
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