Why Don't They Lend? Credit Stagnation in Latin America

IMF Staff Papers, Vol. 49, 2002

29 Pages Posted: 12 Feb 2003

See all articles by Adolfo Barajas

Adolfo Barajas

International Monetary Fund (IMF) - Western Hemisphere Department

Roberto Steiner

Universidad de los Andes, Colombia - Department of Economics

Abstract

This study examines the recent marked slowdown in bank credit to the private sector in Latin America. Based on a study of eight countries - Argentina, Bolivia, Brazil, Chile, Colombia, Peru, Mexico, and Venezuela - the magnitude of the slowdown is documented, comparing it to historical behavior and to similar episodes in other regions of the world. Second, changes in bank balance sheets are examined to determine whether the credit slowdown was merely a reflection of a downturn in bank deposits or whether the asset side has changed. Third, following an econometric approach used in recent studies of bank credit in East Asia and Finland, the paper investigates the possible causes in three countries: Colombia, Mexico, and Peru. While both supply and demand factors appear to have played key roles, their relative importance has varied across the three countries.

Keywords: Credit, banking system, Latin America

JEL Classification: G21, E44

Suggested Citation

Barajas, Adolfo and Steiner, Roberto, Why Don't They Lend? Credit Stagnation in Latin America. IMF Staff Papers, Vol. 49, 2002. Available at SSRN: https://ssrn.com/abstract=361740 or http://dx.doi.org/10.2139/ssrn.361740

Adolfo Barajas (Contact Author)

International Monetary Fund (IMF) - Western Hemisphere Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-4152 (Phone)
202-623-6070 (Fax)

Roberto Steiner

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia
+571 341 2240 (Phone)
+571 281 5771 (Fax)

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