Systems of Banking and Production in Argentina
Víctor Fernández, Carolina Lauxmann and Julio Tealdo
Sectorial Financing. Primary Industrialization Patterns, Concentrated and Foreignized
Vs. Dynamism, Decentralization and Endogeneity

Analyzing the evolution of the financial sector during the period under study, we can observe that the food and drink as well as textile and leather products branches have been the main receivers of loans directed towards manufacturing activities. During the convertibility era, they received nearly 37% of industrial credit, a number that rose until reaching 40% of the financial sector from 2002-2010. The production of chemical substances and products, machinery, equipment and tools manufacturing are the next branches in terms of receiving financial resources, with an average of 11.23% and 10.32%, respectively, for the years 1991-2001, and 13.09% and 8.29% for the post-convertibility era (Figure 12).

Figure 12. Destination of Financial System Credit Within the Manufacturing Sector.
Relative Average Participation of Financing Received by Different Branches (1990-2001; 2002-2010)
Source: Prepared by the authors, based on information from the bcra, Loans by Activities.

This data allows us to infer that the financial profile of productive activity does not differ greatly from what we saw in the 1990s. The banking system continues draining a large portion of funds towards industrial companies that develop their activities protected by some natural comparative advantage of “frivolous protectionism” (Fajnzylber, 1992), which does not allow the country to insert itself into the most dynamic and highest added value branches of international commercial flows.

These industrial branches, which receive more than 50% of financial system flows towards the manufacturing sector, also present elevated concentration levels in their structural conformation. According to data from the Large Businesses Survey (enge), carried out by the indec, the majority of the 500 most important companies in Argentina — in terms of added value —14 are industrial (Figure 13), particularly belonging to food, drinks and tobacco branches, as well as fuel, chemicals, plastics and machinery, equipment and vehicles (Figure 14).

Figure 13. Most Significant Branches of Activity Within the 500 Most Important Companies.
Relative Average Participation (1993-2001; 2002-2009)
*Other activities include: electricity, water and gas, communications,
construction, commerce, transportation and other services.
Source: Prepared by the authors, based on information from indec, Large Companies.

14 Does not include firms with major activities in the following sectors: Agriculture, Financial and Personal Services.