Crises of Confidence: Attitudes of the Domestic Bankers Towards the Credit Problem in Mexico

This paper analyses the Mexican banks' loan policies since 1995. Based on a series of interviews, we find that Mexico's financial system is currently experiencing two crises. First, banks lack confidence in the business practices of small and medium size enterprises. This negative attitude is reinforced by the bankers' perception of a culture of non-repayment. Banks also loan little to big businesses, which rely on the international money market. Second, bankers believe small and medium size business owners lack confidence in the Mexican financial system. Consequently, loan activities are down significantly. Socio-economic growth and development in Mexico will depend upon a profound change in structures, practices and attitudes surrounding loan activities.