MONGABAY.COM
Mongabay.com seeks to raise interest in and appreciation of wild lands and wildlife, while examining the impact of emerging trends in climate, technology, economics, and finance on conservation and development (more)
WEEKLY NEWSLETTER
|
|
Chile
Index
By the end of the Allende period, commercial banks were
little
more than cash vaults. The availability of credit was low,
and
lending patterns were highly distorted. During 1975-90,
however,
Chile's financial sector experienced a remarkable boom,
and by 1992
it was modern and dynamic. Banks performed a variety of
operations,
and the stock exchange was gaining rapidly in importance.
The
development in the 1980s of several financial operations
involved
with servicing Chile's external debt helped to increase
the
sophistication of the system.
The road to a modern financial sector was not easy. In
the
process, a number of banks collapsed as a result of the
credit
crisis of the early 1980s, and interest rates were high.
After a
period of government control, the failed banks were
reprivatized in
the mid-1980s, and the banking sector went through an
extensive
consolidation process. Some banks ceased to exist, and
others
sought mergers. In 1989 the government made the Central
Bank
independent of government control by creating the Central
Bank
Council, a five-member group consisting of two members
appointed by
the government, two by the opposition, and a president
selected by
consensus. Beginning in the late 1980s, the number of
banks became
more stable: thirteen domestic banks and twenty-two
foreign-owned
banks. Their level of operation had rapidly risen by the
early
1990s. Nevertheless, Chile's top seven banks, squeezed by
growing
competition from consumer finance houses and in-store
credit
operations, suffered a 17 percent decline in profits in
1991. As a
result, the banks were looking to the mining sector for
profits.
Since the economic crisis of 1982-83, a recurrent
preoccupation
of policy makers has been the behavior of interest rates
in Chile.
Many analysts argued that the near collapse of the
Pinochet
regime's free-market experiment in those years was the
consequence
of extremely high interest rates. In 1991 and the first
few months
of 1992, interest rates experienced a major decline; this
was the
case for both nominal and real interest rates. As the
degree of
openness in the capital account increased, domestic
interest rates
seemed likely to converge toward international levels.
Data as of March 1994
|
|