No CrossRef data available.
Article contents
A Financial System for Economic Development: Problems and Prospects in Central America*
Published online by Cambridge University Press: 02 January 2018
Extract
This study of financial institutions and processes highlights changes in the policies and practices of investors, governments and international bodies that would accelerate industrial development of Central America. There are three principal conclusions:
1. Commercial banks and related institutions need more flexibility in their operations under the law and administrative procedures. Among these conditions would be adaptations of credit instruments and interest rates to the requirements of a changing economic structure and market conditions. These would increase the number and range of alternatives open to domestic savers and investors and enable financial institutions to undertake operations of longer terms and greater risks.
- Type
- Research Article
- Information
- Copyright
- Copyright © University of Miami 1964
Footnotes
*
An expanded Spanish version of this study is being published simultaneously by Centro de Estudios Monetarios Latinoamericanos, Mexico, D. F.
References
** At the time that this article was written Gregory B. Wolfe was the Director of the Latin American Program of the Committee for Economic Development.
l Guatemala has four private domestic banks and branches of three foreign banks. These banks are legally authorized to grant loans up to one year on personal guarantee, up to five years on chattel mortgage, and up to twenty-five years on real estate mortgages, subject to the customary limitations of lending in relation to capital and reserves. In practice, however, these banks have restricted themselves to loans up to one year for current inventory purposes and up to three years for equipment and improvements. Similar limitations are observed by other private and local commercial banks of which there are three in El Salvador and Honduras, two in Nicaragua (together with a private banking firm and the branch of a foreign bank), one in Costa Rica and one in Panama, in addition to nine branches of American banks and two subsidiaries of European banks.
2 Among examples of these organizations are the Instituto de Fomento de la Producción in Guatemala, the Banco Nacional de Fomento in Honduras, the Instituto de Fomento Nacional in Nicaragua and the Instituto de Fomento Económico in Panama. These institutions were assigned the planning, preparation and actual management of industrial enterprises in the governmental sector. In a way Fomento institutes’ were responsible for pioneering in the general planning, development and promotion fields in Central America during the early fifties. As governments faced new problems, Fomento organizations were given new functions, such as assistance to small private business and agriculture and support of commodity prices. By assigning these tasks to the Fomento institutions, the governments felt that they were discharging social responsibilities; in effect they were refusing to accept the administrative burden accompanying them.
3 The Consejo Nacional Económico was established in Honduras in 1955; the División General de Planificación y Administración was created in Panama in 1959; the Guatemalan Consejo Nacional de Planificación Económica was created in 1954, reorganized in 1958 and again in 1961; the Consejo de Planificación y Coordinación Económica has operated in El Salvador only since 1962, and a law to create a Junta Nacional de Planificación Económica is now under consideration in Costa Rica.