Banking systems are the largest financial intermediaries in the LA-7 countries (Brazil, Chile, Colombia, Mexico, Panama, Peru, and Uruguay), amounting to about 100 percent of LA-7 GDP. Brazil’s banking system is by far the largest in absolute terms, while Panama and Chile have the largest as a share of GDP (Figure 3.1). Since the liberalization of financial systems in the 1990s, most assets in the LA-7 countries are with private banks (about 60 percent of LA-7 GDP), while assets in public banks remain high only in Brazil and Uruguay. Foreign banks also hold important market shares in some of the LA-7 countries (27 percent of LA-7 GDP). However, the integration of regional banking systems remains low. Despite liberalization, most banking systems are characterized by high concentration and, in some cases, high bank interest rate spreads.
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