Monopoly Power in the Peruvian Banking Industry: (1990-1995)
View/ Open
Author
Bravo, Luis Fernando
Subject
Washington and Lee University -- Honors in Economics
Economic stabilization -- Peru
Peru--Economic policy
Metadata
Show full item recordDescription
The core of the thesis tries to determine the extent to which oligopolization constitutes a problem in the determination of interest rates in Peru. To do this, it uses an econometric model
to test the level of competition in the Peruvian banking system. Considering the complexity of
the Peruvian financial system, this project also examines other factors affecting interest rate
levels. . . . It is important to understand the economic and political environment in Peru prior to the
program of August 1990. The first part of the thesis provides a background of the Peruvian
economy and the changes it underwent in the last five years. It describes the main stabilization
and structural reforms together with the results and costs of the program.
Chapter 2 describes the Peruvian financial sector, including a brief history, a list of the
main players in the sector and a list of the main areas of concern regarding the Peruvian financial
sector, some of which are common to emerging financial markets elsewhere. It also describes
the most important interest rates in the Peruvian economy, and compares Peruvian interest rates
(both nominal and real) with other Latin American countries to determine to what extent rates in
Peru are higher than the region's levels.
One of the main areas of concern in the Peruvian banking sector is the degree of changes to improve its situation. Chapter 6 describes and analyzes these factors which affect the
high cost of credit in Peru. The chapter also describes the evolution of Peruvian banking in after
1990 and considers some factors which appeared in the past two years which are contributing to
improvements in the efficiency of the Peruvian banking sector, such as direct intermediation, and
foreign competition.
After the analysis of the problems affecting the cost of credit in the Peruvian financial
sector, some basic recommendations and conclusions are made. Besides briefly mentioning the
future prospects of the Peruvian banking sector, Chapter 7 lists some of the recommendations
required to reduce oligopolistic behavior, as well as some general recommendations to improve
its overall efficiency. Such actions will help reduce the level of interest rates, and also increase
the efficiency of the banking sector, required to achieve long-term economic stability in Peru. [From Introduction]