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Journal Article
Mexico and the peso
Journal Article
New boom on the border
Journal Article
Texas' border: on the front line of change
Working Paper
Convertibility risk, default risk, and the Mexdollar anomaly
Rogers (l992a,b) I put forth the convertibility risk hypothesis in order to explain the anomalous n~gative relationship between the expected rate of Mexican peso depreciation and the ratio of Mexdollars to peso denominated demand deposits. Recently, Gruben and Welch (1994) examine the effect of deteriorating bank loan quality on the variables I consider. Using a cointegration framework, the authors find (i) a negative relationship between non-performing loans and the dollarization ratio and (ii) the conventional positive relationship between expected peso depreciation and dollarization. The ...
Journal Article
The Mexican economic crisis: alternative views
The authors of this article suggest that many of the explanations for the 1994 crisis are based on questionable assumptions and dubious analysis. They contend that, when trying to explain the crisis, most authors have concentrated on the wrong economic "fundamentals." They challenge the conventional view that the crisis was caused by a combination of flawed fiscal, monetary, and exchange rate policies. Their explanation for the crisis belongs in an alternative camp that emphasizes the vulnerability of the Mexican financial system to swings in expectations and investor confidence. ; In their ...
Journal Article
The banking sector rescue in Mexico
In Mexico the December 1994 peso devaluation provoked a profound economic downturn in that country and revealed a fragile banking sector. Fearful that the financial system would collapse under a rising level of past due loans, the Mexican government mounted a rescue of the banking sector by intervening in the daily operations of some problem banks while establishing a series of capitalization and restructuring programs available to all banks. ; This article examines Mexico's bank rescue efforts (1995-98) with a particular focus on the role of the deposit insurance fund, the Bank Fund for the ...
Journal Article
The tequila effect
Journal Article
Liberalization, privatization, and crash: Mexico's banking system in the 1990's
Although Mexico's 1994 peso devaluation and subsequent capital outflows shook the nation's banking system, the foundations of the banking crisis were laid much earlier. ; Econometric evidence suggests that in the wake of the 1991-92 bank privatizations, Mexico's banks entered a market share struggle in which they incurred short-term losses at the margin, perhaps in the interests of greater expected gains over the long term. ; Euphoric investor behavior and a rising economy may have aggravated the situation by making risky borrowers more difficult to identify.