Development banks in Latin America were traditionally given the key role of creating markets by funding long-term capital accumulation—on many occasions with State-owned enterprises in new sectors or strategic activities, besides deepening the financial system. With the implementation of Washington Consensus policies in the 1990s,development banks assumed the function of free market subsidiary institutions whose main goal is to solve market imperfections. Mexico´s Nacional Financiera exemplifies this Copernican turn in policy making. From being Mexico’s key policy bank for development, NAFINSA was transformed into a second-tier financial intermediary oriented to ease MSMEs’ access to financial resources, essentially through innovative Factoring and Guarantees schemes. The paper argues that in order for NAFINSA to become a relevant instrument in strengthening financial intermediation for capital formation with a developmentalist vision to promote structural transformation of the Mexican economy,it must recover some of its functions, prerogatives and responsibilities as a policy bank.
02_2017 (Download the full text in PDF format)