Working Papers

Financial Integration in Central America: New Challenges in the Context of the International Crisis

AUTHOR(s): Izquierdo, Alejandro , Rojas-Suárez, Liliana
PUBLISHED: April 2010


This paper analyzes the importance of financial integration in Central America and the effects of the recent international crisis on the financial systems of the sub-region. After presenting evidence of financial integration in Central America and comparing it to other countries in Latin America and the developing world, the paper describes two important factors that have characterized this process in the past decade and analyzes the impact of financial integration and of foreign bank participation. The paper emphasizes the response of local financial variables to international financial shocks and offers economic policy recommendations based on its findings.

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