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banking systems

Bank credit allocation in Latin America and the Caribbean

Eva M. Gutiérrez's picture

The recent economic growth performance of the countries in Latin America and the Caribbean (LAC) has been hampered by poor productivity growth. While many factors explain the poor productivity and growth performance in the region, lack of financial development, particularly long-term credit to fund productivity-enhancing investments, is often cited as a problem.

Banking systems are the main providers of long-term financing to the private sector around the world.  Regardless of their size or the income level in their country of origin, to fund

fixed assets, firms obtain most of their financing from banks. Households’ main long-term investment, housing, is also overwhelmingly financed by banks.