Why Don't They Lend? Credit Stagnation in Latin America

This study examines the recent marked slowdown in bank credit to the private sector in Latin America. Based on a study of eight countries—Argentina, Bolivia, Brazil, Chile, Colombia, Peru, Mexico, and Venezuela—the magnitude of the slowdown is documented, comparing it to historical behavior and to similar episodes in other regions of the world. Second, changes in bank balance sheets are examined to determine whether the credit slowdown is merely a reflection of a downturn in bank deposits or whether the asset side has changed. Third, following an econometric disequilibrium approach used in recent studies of bank credit in East Asia and Finland, the paper investigates the possible causes in three countries: Colombia, Mexico, and Peru. While both supply and demand factors appear to have played key roles, their relative importance has varied across the three countries. Copyright 2002, International Monetary Fund

The Political Economy of Exchange Rate Policy in Colombia

This paper looks into the political economy forces that helped shape exchange rate policy in Colombia since the early 1960s. As witnessed by the remarkable longevity of the managed crawl, Colombian exchange rate policies since 1967 did not take the form of major regime changes. Policy shifts came about through variations in the rate of crawl, varying degrees of administrative restrictions on capital flows and, on occasions, ad-hoc measures to generate multiple exchange rates.

DETERMINANTS AND CONSEQUENCES OF FOREIGN IN DEBTEDNESS IN COLOMBIAN FIRMS

During the nineties the performance of many emerging economies was linked to their access to foreign capital and its impact on the real exchange rate. Colombia was not an exception, as it experienced a sharp boom and bust cycle during the period. Although a number of studies have attempted to explain the recent underperformance of the Colombian economy, few attempts have been made at analyzing firm-level data. In this paper, we rely on information for a large sample of firms during 1995-2001 (nearly 8000 firms on average) and examine the determinants of foreign indebtedness as well as the effects on firm performance of holding dollar debt amid changes in the real exchange rate (i.e. the so called balance sheet effect"). While size is the most robust determinant of dollar indebtedness, matching seems to take place, to the extent that firms in more open sectors and exporting firms have higher shares of dollar debt. In spite of the limited amount of dollar indebtedness of Colombian firms in general, our estimations suggest there is a negative balance sheet effect on firms´ performance (i.e. on profitability). On the other hand, the interaction of dollar indebtedness with the real exchange rate is generally not significant in our investment regressions."Colombia

Housing tenure and housing demand in Colombia.

Using the 2003 and 2008 Quality of Life Surveys, we identify the factors that affect housing tenure decisions in Colombia and explore the determinants of the demand for rentals and purchases. Variables affecting the choice between buying and renting include civil status, education, age of the household head, size of the household and whether the household resides in an urban area. Households with higher income are more likely to purchase than to rent and the choice of formal housing is positively associated to wealth. Interestingly, households eligible for social housing subsidies are more likely to purchase than to rent and those working in the informal sector are more likely to purchase informal dwellings. Demand is quite responsive to price changes as well as to changes in the price of rental (its closest substitute). The elasticity to permanent income for both buying and renting is similar to that observed in other developing countries, and is higher for those working in the informal sector. This suggests that subsidies and other interventions aimed at fostering demand should not exclude those holding informal sector jobs. Demand is highly responsive to positive shocks to income, a fact probably associated with credit constraints being binding. Subsidies have a large positive impact on demand. Likewise, access to mortgage credit is an important determinant of demand. Finally, savings have a positive effect on demand in 2008, not in 2003. A plausible explanation is that a policy intervention that began in 2000 -i.e, a tax exemption for households that established savings accounts destined for housing purchases-only had an effect in the upper part of the business cycle. In both cases (i.e. subsidies and credit) the positive effect on demand is entirely explained by demand for social housing. "This paper is part of a cross-country project sponsored by the IADBs Research Network".Housing demand, tenure choices, housing market policies, Colombia.

LA CUENTA ESPECIAL DE CAMBIOS, LAS UTILIDADES DEL BANCO DE LA REPÚBLICA Y EL DÉFICIT DEL SECTOR PÚBLICO

Las estadísticas fiscales usualmente no involucran al sistema financiero oficial y, consiguiente, pueden subestimar la presión que el sector público ejerce sobre los recursos de la economía. En el presente trabajo se consolida el resultado del Banco de la República con el sector público no financiero, mediante la recomposición de algunos rubros de la cuenta especial de cambios.BANCOS CENTRALES, DEFICIT FISCAL, IMPUESTO INFLACIONARIO, CUENTA ESPECIAL DE CAMBIOS

Housing tenure and housing demand in Colombia

Using the 2003 and 2008 Quality of Life Surveys, we identify the factors that affect housing tenure decisions in Colombia and explore the determinants of the demand for rentals and purchases. Variables affecting the choice between buying and renting include civil status, education, age of the household head, size of the household and whether the household resides in an urban area. Households with higher income are more likely to purchase than to rent and the choice of formal housing is positively associated to wealth. Interestingly, households eligible for social housing subsidies are more likely to purchase than to rent and those working in the informal sector are more likely to purchase informal dwellings. Demand is quite responsive to price changes as well as to changes in the price of rental (its closest substitute). The elasticity to permanent income for both buying and renting is similar to that observed in other developing countries, and is higher for those working in the informal sector. This suggests that subsidies and other interventions aimed at fostering demand should not exclude those holding informal sector jobs. Demand is highly responsive to positive shocks to income, a fact probably associated with credit constraints being binding. Subsidies have a large positive impact on demand. Likewise, access to mortgage credit is an important determinant of demand. Finally, savings have a positive effect on demand in 2008, not in 2003. A plausible explanation is that a policy intervention that began in 2000 –i.e, a tax exemption for households that established savings accounts destined for housing purchases— only had an effect in the upper part of the business cycle. In both cases (i.e. subsidies and credit) the positive effect on demand is entirely explained by demand for social housing.