Competition and Efficiency in the Mexican Banking Industry ― Theory and Empirical Evidence

Thus far, scholars have not agreed on how to accurately analyze competition in the banking system, how to implement an adequate competition policy in the banking industry, or how the state of competition relates to the efficiency of the banking system. All of these questions are crucial to the implementation of economic policy and to clarifying key theoretical aspects of competition in financial markets.

Competition and Efficiency in the Mexican Banking Industry contributes to the understanding of competition policy in the Mexican banking system and explains how levels of competition relate to the efficiency of banks. This useful new book contrasts concepts of economic theory with empirical evidence to distil optimal policy decisions. In order to do this, the authors study the banking sector in Mexico, a case of a developing country with a regulated and sound banking system, and an industry with a strong participation of global systemic banks. However, the Mexican banking system continues to have low financial deepening in the economy. At the same time, the changes experienced by the Mexican financial system over the last 30 years have completely transformed the architecture, the structure of ownership and control, as well as its competitive conditions. These changes have had an undeniable effect on system performance and efficiency, providing a natural laboratory to answer the questions of scholars, economists, and policymakers.

Sara G. Castellanos is Senior Economist at the Central Bank of Mexico (Banco de Mexico). She worked as an economic researcher at the Economic Research Directorate and the Payment System Directorate of Banco de Mexico from 1998 to 2009, as Principal Economist at BBVA Bancomer from 2009 to 2013, and as Chief Economist of the Mexican Antitrust Authority (Comision Federal de Competencia Economica) from November 2013 to February 2015. She obtained her BA in Economics at Instituto Tecnologico Autonomo de Mexico (1993) and her MA (1995) and PhD in Economics (1998) at the University of California, Los Angeles, USA.

Gustavo A. Del Angel is Professor at Centro de Investigacion y Docencia Economica (CIDE), Mexico. He was Professeur Visitant at the Universite de Paris III in 2006 and Researcher at the UC-San Diego in 2000. In 2009-2011 he worked in Banco de Mexico. In the last ten years, he has participated in consulting projects for public sector entities, international organizations, private sector companies, and NGOs. He has been a non-executive director in several microfinance organizations. Prior to obtaining his PhD, he worked in the commercial banking industry. He holds a BA in Economics from Instituto Tecnologico Autonomo de Mexico (1992) and a PhD in History from Stanford University, USA (2002).

Jesus Gustavo Garza-Garcia is Chief Mexico Economist at Itau BBA, Mexico. Before joining Itau, he worked at the Mexican Ministry of Finance as the Deputy General Director of International Financial Organizations and as the Director of Financial Planning and Head of Investor Relations. Previously, he was a financial researcher at the Directorate of Financial Stability of Banco de Mexico. Jesus holds a BA in Economics from Instituto Tecnologico de Estudios Superiores de Monterrey, Mexico (2002), and an MSc in Financial Economics (2005) and PhD in Finance (2009) from the University of Essex, UK.