Banking in Latin America

Abstract

This chapter offers a unique portrayal of the evolution of banking in Latin America. We contextualize our analysis by providing a detailed assessment of how financial policy has evolved across the region beginning with development models of the post-1945 period. Events of the 1980s and 1990s are a source of recent developments, which we succinctly summarize as the financial deepening and growth of a market-oriented and more competitive environment. Specific developments include the repeal of state involvement in banking, and bank privatization including wider penetration of domestic banking by foreign banks. We examine the effects of consolidation on banking activity before considering the special role development banks have come to play, especially following the global financial crisis. Throughout the chapter, we present data to inform our comparative analysis across regional banking sectors, and between Latin America and other economies.