Can Fintech Foster Competition in the Banking System in Latin America and the Caribbean?
IMF Working Papers, April 29, 2021
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Bibliographic details
- Authors: Suchanan Tambunlertchai, Kotaro Ishi, Takuji Komatsuzaki, Ippei Shibata, Jasmin Sin
- Published: April 29, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513573823.001
Authors and Publication
- Suchanan Tambunlertchai, Kotaro Ishi, Takuji Komatsuzaki, Ippei Shibata, Jasmin Sin
- April 29, 2021
- IMF Working Paper No. 2021/114; Volume: 2021; Issue: 114; Pages: 40
- DOI: https://doi.org/10.5089/9781513573823.001
- ISBN: 9781513573823
- ISSN: 1018-5941
- Stock No: WPIEA2021114
Research Question and Scope
- Revisits the competitive environment of the banking system in Latin America and the Caribbean (LAC).
- Investigates the early impact of fintech development in the region to date.
- Methods used: panel regressions, difference-in-difference regressions, and case studies (Brazil and Mexico).
Key Findings on Net Interest Margins (NIMs) and Banking Structure
- Against a backdrop of high net interest margins (NIMs) and limited financial depth in the region, panel regressions broadly confirm existing literature on associations between NIMs and financial sector structure.
- Factors associated with NIMs identified include:
- Market concentration
- Administrative costs
- Presence of foreign banks
- Differences between domestic and foreign banks narrowed after the 2008-09 Global Financial Crisis.
Fintech Impact Evidence
- Difference-in-difference regressions and case studies on Brazil and Mexico suggest:
- Fintech is associated with a reduction in NIMs.
- Incumbent banks exhibited defensive responses to fintech entry that benefit consumers.
Regulatory and Prudential Considerations
- Case studies shed light on:
- Regulatory approaches to fostering financial innovation.
- Prudential considerations in promoting banking sector competition alongside fintech development.
Subject Tags and Keywords (as provided)
- Subjects: Commercial banks, Competition, Financial institutions, Financial markets, Financial services, Fintech, Foreign banks, Real interest rates, Technology
- Keywords: banking sector competition, Caribbean, Commercial banks, Competition, Fintech, Foreign banks, Global, market share, net interest margins, panel regression, r p rotec tio n, Real interest rates
IMF Working Paper No. 2021/114 — Can Fintech Foster Competition in the Banking System in Latin America and the Caribbean?
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