ABSTRACT
This chapter explores the politics of Mexican financial policy and its growth-inducing potential over time. It demonstrates that domestic influences played an important role in the move toward liberalization of the Mexican financial market. The chapter deals with Zysman's domestic financial structures approach in which he examines the politics of financial policy and its relationship to industrial policy, but it expands it to analyze the transition from state-led to bank-led finance that characterized Mexico's financial liberalization process. Zysman suggests that a country's institutional financial structure affects, or possibly determines, its industrial adjustment and growth process. The chapter argues that bank-leadership of the financial system led to financial policies more conducive to short-term rather than long-term investment strategies which had disastrous effects on the Mexican economy. It attempts to generalize from the Mexican experience with respect to the process by which financial structures evolve and the policy implications of that process.
