Foreign Competition and Banking Industry Dynamics: An Application to Mexico
December 10, 2015Macro, Trade, and Finance Seminar Series

Speaker: Pablo D’Erasmo is a Senior Economist for the Research Department at the Federal Reserve Bank of Philadelphia. More »

Abstract: We develop a simple general equilibrium framework to study the effects of global competition on banking industry dynamics and welfare. We apply the framework to the Mexican banking industry, which underwent a major structural change in the 1990s as a consequence of both government policy and external shocks. Given high concentration in the Mexican banking industry, domestic and foreign banks act strategically in our framework. After calibrating the model to Mexican data, we examine the welfare consequences of government policies which promote global competition. We find relatively high economy-wide welfare gains from allowing foreign bank entry.

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Last Updated: Dec 07, 2015

The Macro, Trade, and Finance Seminar Series is a weekly series hosted by the World Bank's research department. The series invites leading researchers from the fields of macroeconomics, growth, trade, international integration, and finance to present the results of their most recent research in a seminar format. The full list of seminars can be viewed here.

Last Updated: Jul 27, 2015

Event Details
  • Date: December 10, 2015
  • Location: MC10-100
  • Time: 12:30 - 2:00 PM
  • CONTACT: Shweta Mesipam

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