The competitive edge of credit unions in Costa Rica: From financial repression to the risks of a new financial environment
DOI:
https://doi.org/10.22230/cjnser.2018v9n2a289Keywords:
Financial markets, Government policy and regulation, Credit unions, Financial repression, Financial reform in developing countries, Costa Rica / Marchés financiers, Politiques et règlementations gouvernementales, coopératives financièresAbstract
This article argues that financial repression played a key role in the emergence of credit unions (CUs) in Costa Rica, along with other institutional factors. Credit unions took advantage of the opportunity to serve borrowers whose requests had been refused by banks. Given the sweeping reforms of the Costa Rican financial system aimed at reducing the scope of financial repression, this article poses the question of how those reforms impacted the competitiveness of CUs. Previous literature suggests that financial reform may lead to concentration in the financial sector, and not to the promotion of a more competitive environment. This article presents data showing that CUs in Costa Rica exhibited an enhanced ability to gain market share and also provides an explanation for the observed trend.
RÉSUMÉ
L’article soutient que la répression financière avec d’autres facteurs institutionnels a joué un rôle clé dans l’émergence des coopératives financières (CF) au Costa Rica. Les CF ont profité de l’occasion pour servir les emprunteurs dont les demandes avaient été refusées par les banques. Compte tenu des réformes radicales du système financier costaricien, visant à réduire l’étendue de la répression financière, l’article pose la question de l’incidence de ces réformes sur la compétitivité des CF. La littérature précédente suggère que la réforme financière peut conduire à une concentration du secteur financier et non à la promotion d’un environnement plus compétitif. Notre article démontre que les CF du Costa Rica présentent une capacité à accroître leurs parts de marché. Nous fournissons une explication de la tendance observée.
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