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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.
Journal Article
The Mexican peso crisis: implications for international finance
The Mexican peso crisis has raised legitimate questions about Mexican economic policies before and during the events of December 1994 and January 1995, but its propagation through international financial markets has also pointed to broader questions about those markets. This article considers the international financial implications of the peso crisis from three perspectives: the creditors and their markets, the countries receiving large capital inflows, and the functioning of the international financial system.
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 peso devaluation's impact on Texas
Working Paper
The mirage of fixed exchange rates
This paper discusses the profound difficulties of maintaining fixed exchange rates in a world of expanding global capital markets. Contrary to popular wisdom, industrialized-country monetary authorities easily have the resources to defend exchange parities against virtually any private speculative attack. But if their commitment to use those resources lacks credibility with markets, the costs to the broader economy of defending an exchange-rate peg can be very high. The dynamic interplay between credibility and commitment is illustrated by the 1992 Swedish and British crises.
Journal Article
Distinguishing NAFTA from the peso crisis
Journal Article
Mexico's liquidity-driven financial panic
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 ...