Gabriel Aguilera, Party Discipline, Electoral Competition, and Banking Reforms in Democratic Mexico
Has democratization in Mexico begun to tilt policies in favor of consumers and away from entrenched interest groups, as some scholars predict? Evidence from post-crisis banking reform efforts during 1995 to 2000 suggests that a sharp increase in interparty electoral competition did have salutary effects for consumers. It created incentives for the PRI government, with legislative support from the PAN, to improve capital adequacy and liberalize foreign investment that stabilized the banking system. However, high party discipline—low intraparty competition—created incentives for the PRI-PAN to collude to implement profit-padding regulations that benefitted bankers and harmed consumers. Party discipline appears to be a significant obstacle for consumer-friendly regulatory reforms in Mexico.
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