Costa Rica: Reformas Financieras Recientes

Abstract

This paper examines the evolution of the Costa Rican financial reform during the past decade. The conceptual framework for the analysis distinguishes between two perspectives on the role of the financial system: as a mechanism for economic growth through the integration of markets or as a fiscal tool for planning and the levying of taxes and granting of subsidies through financial transactions. After a recognition of the deficiencies of a fiscal perspective, the Costa Rican financial reform has attempted to shift policy emphasis towards market-oriented operations. The two most important remaining distortions are the state-owned banks' monopoly on deposit mobilization and the lack of clear property rights (and, therefore, of accountability) over those banks. There is also incomplete and inadequate regulation of non-banking financial institutions. A more market-oriented perspective needs to be brought to their operation.