Credit Stagnation in Latin America

IMF Working Papers, March 1, 2002

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Credit Stagnation in Latin America

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Bibliographic details

• Authors: Adolfo Barajas, Roberto Steiner
• Published: March 1, 2002
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451847390.001

Summary

• This study examines the recent marked slowdown in bank credit to the private sector in Latin America.
• Eight countries studied: Argentina, Bolivia, Brazil, Chile, Colombia, Peru, Mexico, and Venezuela.
• Analysis compares the magnitude of the slowdown to historical behavior and to slowdown episodes in other regions of the world.
• The study examines bank balance sheets to determine whether the credit slowdown reflects a slowdown in bank deposits or changes on the asset side.
• An econometric disequilibrium approach (used in recent studies of credit slowdowns in East Asia and Finland) is applied to investigate possible causes for the slowdown in three countries: Colombia, Mexico, and Peru.
• Conclusion: Both supply and demand factors appear to have played key roles, with relative importance varying across countries.

Methodology and Analytical Focus

• Comparative documentation of the magnitude of the credit slowdown versus historical behavior and international episodes.
• Examination of bank balance sheets to assess deposit-side versus asset-side changes.
• Econometric disequilibrium approach applied to country cases (Colombia, Mexico, Peru) to investigate causes, following approaches used for East Asia and Finland.

Key Findings

• The paper documents a marked slowdown in bank credit to the private sector across the eight countries studied.
• Bank balance sheet analysis assesses whether the slowdown is attributable to deposit declines or to changes in asset behavior.
• In the country case studies (Colombia, Mexico, Peru), evidence points to both supply-side and demand-side factors contributing to the slowdown.
• The relative importance of supply versus demand factors differs by country.

Subjects and Keywords (as listed)

• Subjects: Bank credit, Banking, Credit, Credit booms, Credit risk, Financial institutions, Financial regulation and supervision, Loans, Money
• Keywords: Bank credit, banking system, central bank, credit, Credit booms, credit contraction, credit growth, Credit risk, credit slowdown, East Asia, Latin America, Loans, money bank, net credit, WP

Content in this bundle

• Credit Stagnation in Latin America - WP/02/53
  • Credit Stagnation in Latin America - WP/02/53 (Markdown version)
  • Credit Stagnation in Latin America - WP/02/53 (PDF)