Patters of evolution of the Mexican clearing house system (1940-1980) Demography or Levels of Economic Activity? Gustavo A.

Patters of evolution of the Mexican clearing house system (1940-1980) Demography or Levels of Economic Activity? Gustavo A. Del Angel

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Some facts for the period 1940-1980: Between the 1940s and the late 1970s bank branch expansion followed the demographic trend of the country (in search for savings) Opening of regional banks as well as credit were concentrated in areas of relevant economic activiy However it is unclear how transactions and volume of bank activiy was dispersed in the country 3

Central question: What was the relationship between regional patterns of activity of clearing houses (volume of transactions and its value) and demographic patterns? and regional economic activity (GDP per cápita)? What is the driving force behind financial activity? How differentiated is the activity among regions? How can we characterize levels of financial activity? 4

Relevance: Need to have a [historical] indicator of financial activity at regional level Prove an academic use of historical information originally produced by the central bank and stored in its historical archives 5

The banking law of 1932 decreed that the central bank develop a system of clearing houses Previous to those years, clearinghouse services were carried out, mainly, by private institutions (Banamex during Porfiriato for banknotes) 6

Confiada al Banco de México, por la Ley de 12 de abril del corriente año, la organización del servicio de compensación, y establecido el sistema de asociación de todos los bancos comerciales al de México, la nueva Ley de Instituciones de Crédito se limita sobre el particular a definir el carácter jurídico de la compensación bancaria y a dar las bases para el servicio de compensación que organizara el Banco de México. El funcionamiento de este servicio y el de las cámaras de compensación local en toda la República, será un elemento de movilización y de economía en el manejo monetario, cuya eficacia ha pasado ya de la etapa de experimentación. Exposición de Motivos, Ley General de Instituciones de Crédito, 1932. Artículo 63.-- La compensación se llamara "local", si se efectúa entre las instituciones que operan en la plaza donde tenga establecida oficina d Banco de México; se llamarán compensación "por zona", si se efectúa entre instituciones que operen en diversas plazas comprendidas dentro de las zona señalada al efecto pare la oficina respectiva del Banco de México; se llamara "nacional", si la compensación se efectúa por instituciones que operen en plazas de diversas zonas de la República. Para todos los efectos de la compensación, las sucursales se entenderán como instituciones autónomas. Articulo 64.-- En las plazas donde no exista oficina respectiva del Banco de México, las instituciones que en ellas operen podrán organización Cámara Local de Compensación como sociedad de capital variable conforme al articulo 80., con la aprobación de la Comisión Nacional Bancaria. Ley General de Instituciones de Crédito, 1941 7

There were different layers for the activity of the clearinghouse system: National Regional Local In addition there were banks that worked as corresponsal to Banco de México for this purpose Automation began in the 1970s. Thus organizing CECOBAN in 1979 under the leadership of the central bank. Privatization of CECOBAN in 1990s. 8

GDP per capita (1970=100) and documents processed per capita 14000 12000 10000 8000 6000 4000 2000 0 1.800 1.600 1.400 1.200 1.000 0.800 0.600 0.400 0.200 0.000 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 PIB per cápita Documentos per Cápita (población) 9

GDP per capita (1970=100) and average value (1970=100) of procesed documents 14000 14.000 12000 12.000 10000 10.000 8000 8.000 6000 6.000 4000 4.000 2000 2.000 0 0.000 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 PIB per cápita Valor Promedio (miles de pesos) 10

GDP per capita (1970=100) and documents processed per capita 14.000 12.000 10.000 8.000 6.000 4.000 2.000 0.000 1.800 1.600 1.400 1.200 1.000 0.800 0.600 0.400 0.200 0.000 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Valor Promedio (miles de pesos) Documentos per Cápita (población) 11

Average value of documents processed in the clearing house system. Pesos 1970=100 Cartography of Density 1940 12

Average value of documents processed in the clearing house system. Pesos 1970=100 Cartography of Density 1950 13

Average value of documents processed in the clearing house system. Pesos 1970=100 Cartography of Density 1960 14

Average value of documents processed in the clearing house system. Pesos 1970=100 Cartography of Density 1970 15

Average value of documents processed in the clearing house system. Pesos 1970=100 Cartography of Density 1979 16

Analysis of data (quasi panel - unbalanced): Volume of transactions Value of transactions Average value of transactions by Year 1940-1979 Clearinghouse (10 main regions out of 15) An estimate of the Population covered by the regional clearinghouse (1940-1979) An estimate of the GDP of the region covered by the clearinghouse (1940-1979) 17

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Volume Dependent Variable: D(LOGVOL) Coefficient Std. Error Prob. D(LOG POBLACION) 1.297544*** 0.052881 0.0000 D(LOG PIB PER CAPITA) 1.638006*** 0.075798 0.0000 Value Dependent Variable: D(LOGVAL) Coefficient Std. Error Prob. D(LOG POBLACION) 1.284954*** 0.061059 0.0000 Not significant in other functional forms D(LOG PIB PER CAPITA) 1.744196*** 0.087520 0.0000 Average Value of transactions Dependent Variable: D(LOGVALORAVG) Coefficient Std. Error Prob. D(LOG POBLACION) -0.012590 0.028138 0.6549 D(LOG PIB PER CAPITA) 0.106190*** 0.040332 0.0089 20

Preliminary and very basic results: Population in a region, as expected, is significantly related to volume of transactions trivial Population in a region is significantly related to (total) value of transactions Population in a region does not help to explain the average value of documents GDP per capita in a region is significantly related to volume, total value, and average value of transactions 21

Thank you 22