Mexico’s Stealthy, Necessary Bank Reform

Since President Enrique Pena Nieto took office last December, Mexico has embarked on a flurry of structural reforms in areas as varied as telecommunications, education, taxes and the country’s national oil industry.

Yet the one reform likely to have the most immediate positive economic effect has gone relatively unheralded: bank lending reform, which the Mexican Senate is about to . Although moves to the oil industry represent a revolutionary shift, their impact on increased production might not be felt for years. Likewise, higher taxes on firms and individuals resulting from Mexico’s much-needed fiscal overhaul might well slow the Mexican economy in the short run. But by making it easier to extend credit to small and medium enterprises and low-income families, Pena Nieto’s lending reforms could boost the economy as early as next year.