ABSTRACT
This chapter explores possible impacts of financial liberalization and increasing financial openness in Latin American countries on employment, income distribution and output through their effects on the structure and performance of firms distinguished by size. Some available empirical evidence bears on the effects of financial liberalization, some bears on international financial integration, and some relates to both, usually because both phenomena were occurring at the same time. In developing economies, the process of financial liberalization has taken place mainly in the last decade, with a wide range of apparent outcomes. Evidence from several studies in Mexico makes it clear that the larger firms are the main direct users of and beneficiaries from the presence of foreign banks. The evidence on the high and rising role of supplier credits for small firms in Mexico highlights the importance of a better understanding of where bank credit fits in the bigger financing picture for small firms.
