Competition and Efficiency in the Mexican Banking Industry: by Sara G. Castellanos, Gustavo A. Del Ángel, Jesús G.

By Sara G. Castellanos, Gustavo A. Del Ángel, Jesús G. Garza-García

This priceless new publication contributes to the knowledge of festival coverage within the Mexican banking process and explains how degrees of festival relate to banks' potency. It contrasts options of monetary concept with empirical proof to distill optimum coverage judgements. The authors research the banking region in Mexico, a constructing state with a regulated and sound banking method and an with powerful participation from international systemic banks. notwithstanding, the Mexican banking approach maintains to have low monetary deepening within the economic climate. concurrently, adjustments skilled through the Mexican economy in fresh a long time have thoroughly reworked its structure, constitution of possession and regulate, and its aggressive stipulations, and feature undeniably affected procedure functionality and potency. this gives a usual laboratory during which to respond to the questions of students, economists, and policymakers.

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Extra info for Competition and Efficiency in the Mexican Banking Industry: Theory and Empirical Evidence

Sample text

To some extent, financial authorities showed conflicting viewpoints at the time (Del Ángel 2003). In the 1970s, many policymakers began to express reservations about concentration. This change of opinion not only reflected the situation of the banking industry at that time, but also how public officials perceived the problem.

On the one hand, some academics have argued in favor of more competition, suggesting that it enhances the stability of the system, the so-called competition-stability view. On the contrary, others suggest a negative relationship between bank competition and financial stability, supporting the “competition-fragility” view. Some authors argue that competition is desirable in the banking system (as in any other industry) since it increases the level of efficiency in the allocation of resources and generates better prices for consumers (Beck 2008).

4 There are two approaches when analyzing DEA. The first approach is the input-oriented model in which the model assumes the minimization of inputs in order produce a constant amount of output. Thanassoulis (2003) defines it as a DMU is Pareto-efficient if it is not possible to lower anyone of its input levels without increasing at least another input level and/or without lowering at least one of its output levels. The second approach is L I T E R AT U R E R E V I E W O F B A N K I N G S T U D I E S 21 the output-oriented approach in which the model assumes the maximization of output subject to the amount of input available.

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