Systems of Banking and Production in Argentina
Víctor Fernández, Carolina Lauxmann and Julio Tealdo
Reproductive Dynamics of the Financial Banking System and Ways to Valuate Surplus

Despite these morphological changes, the reproductive dynamic of the post-crisis financial banking system does not seem to have undergone greater changes than what occurred in the 1990s. The sector’s evolution, in terms of the value of financial intermediation, continues to be more dynamic than that of the industrial sector and the economy combined (Figure 8).

Figure 8. Evolution of Financial Intermediation,
Manufacturing and Gross Domestic Product (1990-2010)
Source: Prepared by the authors, based on information from indec, National Accounts.

It is true that during the first years of the post-convertibility era, the growth rate for these sectors leveled off somewhat in comparison to the time period from 1990-2001, when the annual financial intermediation growth rate was around 12.51%, and around 2.71% for the manufacturing industry, while the growth rate for Gross Domestic Product was 3.25%. However, starting in 2003, and following the reworking of deposit and loan levels, which allowed the banking system to recover its influential role among flows of surplus capital and possible investment destinations (Damill et al., 2004), we see evidence of a new spike in financial intermediation growth. This sector grew at an average annual rate of 13.95% from 2004-2010, despite the global financial crisis, while manufacturing and the gdp grew at 6.23% and 7.13%, respectively, according to data from the National Account of the National Institute for Statistics and the Census (indec).

From this differentiated behavior of the financial banking system, we can infer that there is a certain auto-reproduction capacity, which strengthens the system to grow relatively independent from the evolution of other economic sectors. The analysis of the financial system’s profitability composition further reinforces the presumption that there is a disconnect between the financial system’s reproduction dynamics and the rest of the branches of the economy. Services — credit cards, account maintenance, commissions tied to liabilities, real-estate values, guarantees, renting safety deposit boxes, exchange operations, among others — constituted the main source of income for financial institutions (30.61%) during the time period 2005-2010.10 The second greatest contribution to income came from interests (26.11%), with a higher incidence of personal credit over the total of Non-Financial Private Sector (nfps) Loans (Allami and Cibils, 2011). Finally, in third place, we find the holding of public bonds (20.35%) (Figure 9).

Figure 9. Composition of Gross Profit Rates of the Financial System.
Relative Average Participation of Different Areas (2005-2010)

Source: Prepared by the authors, based on information from bcra, Banking Report.

This panorama would seem to suggest that policies implemented to emerge from the 2001 crisis, and their consequences on the financial banking system, did not bring about a substantial modification in the ssp based on a drainage flow of said system that would dynamize productive accumulation. To continue with this analysis, the next section will investigate the evolution of the relationship between the banking system and the production system.

10 The absence of published data from the bcra on the financial sector’s profitability for a large part of the 1990s does not allow us to perform a comparative analysis on this indicator between the convertibility and post-convertibility eras.