A chronicle of a Latin American country financial crash: the case of Venezuela
Between 1994 and 1995 the Venezuelan banking experienced a drastic financial crash that eventually took half of the banking industry down, created a wave of bankruptcies of enterprises, distorted public finances (as government assistance to ailing banks mounted), and generated a balance of payments...
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| Formato: | Artículo científico |
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Universidad Central de Venezuela
2000
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| Acceso en línea: | http://www.redalyc.org/articulo.oa?id=36460207 http://biblioteca.clacso.edu.ar/gsdl/cgi-bin/library.cgi?a=d&c=ve/ve-004&d=36460207oai |
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| Sumario: | Between 1994 and 1995 the Venezuelan banking experienced a drastic financial crash that eventually took half of the banking industry down, created a wave of bankruptcies of enterprises, distorted public finances (as government assistance to ailing banks mounted), and generated a balance of payments crisis. This paper details the events that precipitated Venezuelas financial crisis and examines how the problems took shape The paper outlines the factors that cause and precipitate a financial collapse. These are summarized in three broad categories, namely: the macroeconomic context, the institutional setting, and policy orientation. The Venezuelan experience demonstrates that the so-presumed coherence between orthodox reforms and financial liberalization should not be exaggerated. If the reforms itself generate transitory but severe macroeconomic instability and are implemented without taking care of a fragile institutional setting and an already dangerous trend in banking operations, the results can be counter-productive. |
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