Structural Evolution and Cycles of Consolidation

Abstract

Over the last 40 years, the Mexican banking system has experienced several waves of consolidation. Throughout these decades, there have been cycles in which the number of participants in the industry has increased and cycles in which the number of institutions has contracted through processes of bank consolidation. This has been intrinsically linked to the structure of this industry, in other words, not only the number of participants but the nature and scope of their activities. At the same time, the cycles of consolidation have contributed to maintain an industry in which larger participants concentrate a significant percentage of banking activities. This chapter explains how the structure of the Mexican banking industry has evolved over the last four decades and emphasizes on how the processes of consolidation characterize this evolution.