Banking and financial services in Mexico.
Ho, Soo Woon.
Lim, Keng Hee.
Ngo, Robin King Ching.
Lim, Yong How.
Date of Issue2000
College of Business (Nanyang Business School)
The objective of this dissertation is to identify the opportunities and pitfalls of investing in the banking and financial, or any other sector, given the current supporting banking and financial infrastructure in Mexico. The approach we have adopted is to examine the impact of the Tequila Crisis in 1994 on the current business environment in Mexico and the consequential actions that have been taken. The effects of this recent crisis have been far reaching and are still present today, six years after the event. Therefore, in the process of identifying the opportunities and pitfalls for the investor, it is important to first analyse the crisis in depth. We analyse the causes of the crisis, the reforms implemented and the impact of the reforms. Mexico has always had a weak regulatory and supervisory banking system. Predictably, when interest rates shot up and the peso depreciated in 1994, the Mexican banking and financial system collapsed. Banking reforms were soon put in place. We analyse whether these reforms were successful in rescuing the sector and their implications on the economy. The face of the banking sector is fast changing with the influx of foreign players who feel more assured because of a more liberalised infrastructure, giving rise to opportunities of mergers and acquisitions. In the current climate of better supervisory and regulatory system and more liberalised environment, investors should now be more confident of investing in Mexico. However, investors should also be aware that the credit crunch has not disappeared entirely and therefore, they should be ready to inject funds of their own when investing in Mexico.
Nanyang Technological University