Knowledge Bank

This paper attempts an institutional evaluation of the Banco Popular in Costa Rica, a financial organization that captures forced savings from all workers and mobilizes deposits from the public. The paper addresses issues related to the institution's conflicting objectives (“social" versus "financial"), the diffused structure of property rights ("owned" but not controlled by the workers), and its sui generis regulatory regime. The paper compares the financial performance of this institution with that of other banks in Costa Rica, including an identification of the components of its intermediation margins. It includes recommendations for both organizational design (revision of the property rights structure) and financial policies that would allow this bank to compete in the new I deregulated environment.