La Reforma Financiera En Costa Rica
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Date
1990-04
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Ohio State University. Department of Agricultural, Environmental, and Development Economics
Abstract
The Costa Rican financial reform has attempted to increase competition in financial markets, allow the market determination of interest rates, eliminate government interference in credit allocation, improve bank prudential supervision, and increase the independence of the Central Bank. The nationalization of commercial banks in 1948 had created a state monopoly in deposit mobilization and had transformed the banks into state enterprises. Borrower-dominated, bureaucratic institutions, the state-owned banks rapidly lost market share in the 1980s. The abuse of the banks' fiscal-support function led to the crisis early in the decade. Concentrated in San Jose, the new private banks do not compete with the stateowned banks in the rural areas. Local financial intermediaries, such as credit unions, must be promoted, once prudential regulation has been extended to cover them. High real interest rates reflect a fiscal budget not totally under control.