Post-Crisis Bank Behavior: Lessons from Mercosur

41 Pages Posted: 29 Jan 2010

See all articles by Montfort Mlachila

Montfort Mlachila

International Monetary Fund (IMF)

Sarah Sanya

International Monetary Fund

Multiple version iconThere are 2 versions of this paper

Date Written: January 1, 2010

Abstract

Did the occurrence of systemic banking crises in the 1990s and 2000s significantly alter the behavior of banks in the Mercosur? The objective of this paper is to answer this question by analyzing changes in bank behavior after crises in the Mercosur region. To our knowledge, this is the first paper to apply the convergence methodology - which is common in the growth literature - to post-crisis bank behavior. Using a panel dataset of commercial banks during the period 1990-2006, we analyze the impact of crises on four sets of financial indicators of bank behavior - profitability, maturity preference, credit supply, and risk. The paper finds that most indicators of bank behavior, such as profitability, in fact revert to previous or more normal levels. However, a key finding of the paper is that private sector intermediation is significantly reduced for prolonged periods of time and that high levels excess liquidity persist well after the crisis.

Keywords: Bank Behavior, Bank Crisis, Convergence, Mercosur

JEL Classification: G21, G28, G32, G33

Suggested Citation

Mlachila, Montfort and Sanya, Sarah O., Post-Crisis Bank Behavior: Lessons from Mercosur (January 1, 2010). International Monetary Fund Working Paper No. 10/1, Available at SSRN: https://ssrn.com/abstract=1544473 or http://dx.doi.org/10.2139/ssrn.1544473

Montfort Mlachila

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Sarah O. Sanya (Contact Author)

International Monetary Fund ( email )

700 19th Street, NW
Washington, DC 22209
United States
2026239598 (Phone)

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