Mexico - Financial Sector Assessment Program Update : Technical Note on Strategic Issues in Development Bank Reform
State ownership in financial intermediation in Mexico has continued to be significant in qualitative as well as quantitative terms, with about 20-25 percent per cent of the total credit of the banking system provided by development banks (DBs) and...
| Main Authors: | , |
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| Format: | Report |
| Language: | English en_US |
| Published: |
Washington, DC : World Bank
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/146761468057262504/Mexico-Technical-note-on-strategic-issues-in-development-bank-reform http://hdl.handle.net/10986/37378 |
| Summary: | State ownership in financial
intermediation in Mexico has continued to be significant in
qualitative as well as quantitative terms, with about 20-25
percent per cent of the total credit of the banking system
provided by development banks (DBs) and funds during the
last five years. The importance of government ownership in
financial intermediation is not only quantitative, but
qualitative, with influence on key sectors in the Mexican
economic development. The 2001 joint World Bank-
International Monetary Fund (IMF) Financial Sector
Assessment Program (FSAP) that took place in 2001 identified
a number of problems related to the operation of DBs in
Mexico. Some DBs had unclear mandates or did not live up to
their mandates with their activities overlapping among
themselves or with the activities of commercial banks. Some
of them were performing quasi-fiscal activities outside the
scope of the budget process, and all of them were loss
making even after several rounds of recapitalization. Their
operation was often inefficient with high costs, too many
employees, and weak internal controls. Fiscal subsidies
involved in their operations were not well targeted and were
channeled in a non-transparent manner. After the 2001 FSAP
assessment the authorities started a reform effort
addressing some of the problems mentioned above through
legal reforms and tighter monitoring. |
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