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Can Fintech Foster Competition in the Banking System in Latin America and the Caribbean?
Author:
Suchanan Tambunlertchai
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,
Kotaro Ishi
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,
Mr. Takuji Komatsuzaki
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,
Mr. Ippei Shibatanull

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Jasmin Sin
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Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 114
Language:
English
Publication Date:
29 Apr 2021
DOI:
https://doi.org/10.5089/9781513573823.001
ISBN:
9781513573823
ISSN:
1018-5941
Pages:
40
Keywords:
banking sector competition; panel regression; net interest margins; market share; r p rotec tio n; Fintech; Commercial banks; Foreign banks; Competition; Real interest rates; Caribbean; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper revisits the competitive environment of the banking system in Latin America and the Caribbean (LAC) and investigates the early impact of fintech development in the region thus far. Against the backdrop of high net interest margins (NIMs) and limited financial depth in the region, panel regressions broadly confirm results of existing literature on the association of NIMs with the changes in the financial sector structure, including market concentration, administrative costs, and foreign banks, although differences between domestic and foreign banks narrowed after the 2008-09 Global Financial Crisis. Difference-in-difference regressions and case studies on Brazil and Mexico suggest that fintech is associated with a reduction in NIMs and defensive responses by incumbent banks that benefit consumers. The case studies also shed light on regulatory approaches and prudential considerations in fostering financial innovation and banking sector competition.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2021: Issue 114