Systems of Banking and Production in Argentina
Víctor Fernández, Carolina Lauxmann and Julio Tealdo

The 1990s in Argentina was a kingdom of neoliberal policies. In keeping with recommendations from the Washington Consensus (wc), besides the exchange regime’s flexibility, a strategy of fiscal discipline was implemented: commercial liberalization, promotion of foreign direct investment, privatization and financial liberalization,4 all directed towards restructuring the Argentinean economy in such a way that would allow competitive entry into the global market and drive growth (Fernández et al., 2005).

Far from this objective, the strategy favored the dismantling and de-sophistication of the productive fabric (Kosacoff, 2002; Kulfas and Schorr, 2002), mainly by exposing small and medium-sized businesses to international competition without any quali/quantitative support from the State (Fernández et al., 2005). Under these dynamics, the reforms program sharpened capital concentration levels, while the simultaneous reduction of the productive apparatus and the consequent increase in unemployment aggravated general social conditions (Basualdo, 2000).

The unsustainability of this model became clear in mid-1998. The Argentinean economy entered a prolonged recession that led to one of the greatest crises in recent history in 2001, with a decline in production of approximately 20%, unemployment levels higher than 21% and poverty higher than 53%. However, this crisis and the collapse of the convertibility regime are what obligated the country to emerge from a scenario favoring re-linking of reproduction of economic surplus with productive investment. Still, to what extent did these fall-out transformations contribute to modifying the financial banking system and its links with the productive system? Have they tended towards the conformation of an endogenous, dynamic and decentralized pattern of accumulation, capable of serving as Argentina’s economic motor and able to bring about serious change for the ssp? In the following sections we will try to answer these questions.

CHANGES AND CONTINUITY (1990-2001, 2002-2008)

Evolution of Structural Make-Up

a) Levels of Concentration-Decentralization in the Financial Banking System

In the 1990s, in a context of the previously mentioned process of liberalization, deregulation and privatization, the Argentinean financial banking system suffered severe contraction due to a series of absorptions, mergers, associations, purchases and liquidations that resulted in a net reduction of the total number of entities that comprised the system. Of the 166 existing institutions in December 1991, only 86 were still around by the end of 2001, which means a 48.2% decrease in the total number of banking institutions. In the post-convertibility period, we observe that the concentration tendency was maintained, although with less intensity than during the 1990s. Of the 86 banks at the beginning of 2002, only 64 survived by the end of 2010, which means a 25.6% relative decrease in the number of institutions (Figure 1).

Figure 1. Financial Banking System
Evolution of the Number of Institutions by Type
Source: Prepared by the authors, based on information from the bcra, Financial Institutions Report.

4 Using tenets from neoclassic economic theory as a base, they sought to liberate these markets from “financial repression.” See Cibils and Allami (2010) for further information on the context in which these ideas developed and the most relevant works to this approach.