International Prudential regulation and the prevention of banking crises in latin america.

The Banking sector of Latin America has been one of the fastest growing in the world as the liberalization policies adopted by various Governments have been able to create an environment which is fostering the growth of market based economies in Latin America . During early1990s most of the Latin American countries started the process of economic reforms aimed at ending the chronic macroeconomic instability into the region . The authors have been successful in demonstrating the overall economic history of the region by outlining how the macroeconomic instability into the region was causing

overall failure of the banking sector in the region

The reforms included the phenomenon of dollarization of the foreign currency accounts too however , the earlier regimes in the region made the banking sector more vulnerable and fragile to the economic shocks caused by the different exchange rate regimes prevalent into the region Further , the author has also been successful in outlining how the financial liberalization can result into banking crisis once the banking sector is developed through the deregulation . What is however also important to note that the writer has failed to take the clear impact of the financial liberalization on the banking sector and failed to outline other factors which can cause banking crisis ? Further , it is also critical to understand that though the authors has been able to discuss how the credit expansion can lead to the inflationary pressures on the asset prices

It is a well known phenomenon within the banking industry that the asset...