The Devcluprnent of Argentino C o m o r c í a l Banking Sinco 1957

Instituto Torcuatia Di T o l l a Centro de 1nvesti~;acione S

Econbmicas - Octubro, 1965

Since 1957, when Argentina' a commercial banks raoovored thoir

autonoq a f t ~ r n decade of complete dependonce on t ho Central

Bmk, there has beon n ronarkablu growth in the numbor of banking

offic~si ( A Irbc7..nking o f f i o o " is deIinod ns any p h i s i c r i l l y s a p u a t e

aporat ional unit of ;L b d i n g e n t o r p r i s o - hond o f f i co , brmoh,

ctgonoy, otc.) m i n g t h o yeara 1958-63, t h o a v o r q p rwlual r a t o o f

inoronso in that numbor wns 6.2 $, as cociparrid vtith 2-1 $ duHng

193.5-45 ( t ho f i r a t doondo of t h o Contrnl W k i a oxistanco) w d 1.8%

during tho 1946-57 poriod, Ttia f i p r o of 6.2 $ l a d n o considornbly

in ox 0038 of t ho 3.84 $ m n u d r i s c in tho numbor of bnnking of f i o o s

fn t h o Unitod Z t a t o s during 1959-63, Yclt t h i a unprooodantodly rapid

growth occurrod in a p o r f o d whon tho p r o p o r t i o n of barik doponits t o

nntfonal praduct i n s fnlling, m d whon tho oconoqy aa a wholo waa

growing nt a vory 8101-J rato, It has boon sut;gostod, no cr ponslblc

axplanat ion of t h i o apparont pa rdmz, that t h o ozpLmsion of 1957-63

wan duo to n backloe of douwd f o r bnvlking ~orvicon whioh had

accumlatod o a r l i o r , Acoording to t h i o thoory, dur ing t h o yaara

whon t h o oommorcii~l b a k s woro in offoot moroly aeonts f o r tho

C o n t r n l Bmk, t h o y had no inoont ivu t o uxtdnd t h c i r ac t iv i t ios by

aoqufring cioru custornorn a d oütting up now brmohoo, md in my

caso t h o Con t ra1 B:aklo own policy was f a i r ly ro~trictivu in t h i a

rospoct ; but i-fhcn thu systum was chmgod i r i 1957 oo as to r o n t o r o

fn i t fa t ivo t o t h o commorcinl bmka, it wno natural that thoy

should oxpitnd in o r d o r t o mako up lost gaouiid. It w i l l bo =@ud

l n t z r t h n t t h i a is not a su f f i c ion t o z p l m a t i o n of whut has hap-

ponod: íU1 t h o G ~ O ? it d o o ~ raf 0 0 BOMO f u r t h o r quoations, whioh

Yenr 1944 1945 1946 1947 1948 19ii9 1 9 3 1951

B d d n g \ Startod 26 33 17 1 3 14 5 16 22 Cuuulr'tivo

Offioos j rfotUl Ü03 8 862 879 . 892 906 911 927 $ i n o m a s a i n y o n r 3.2 4.0 2.0 1.5 1.6 0.6 1.8 2.4

Stnrtad 15 20 29 14 15 28 51 66 ImkIng 1 Oumlctivo Offioos J Totd 949 964 984 1013 l O q 1042 1070 11U $ inoroase in yanr 1.6 2.2 2.9 1.4 1.5 2.7 4.8 6.1

- --. . .. . . - - Btartoi, 103 115 64 65 -

Bwx c u m i a t i v o Offioos 11Ug 1292 1407 1471 1536 S& incroaso i n yoar 0.7 8.9 4.5 4.4 - - - ... .. -- - - - . --.-. -. -----

A s tho f i su roo i n tho t a b l o r o f ~ r only t o b d c i n g ofi'iooa whioh

qua l i f iod f o r inoluwlon i n tho Guía Bu~io&% by surving u n t i 1

1964, tha cunnilativo t o t a i s oannot bo a S ~ ~ s l 0 6 t o ro:>rosont t ho

nuiabor a c t u a l l y ozis-biri, i n oaoh of tho : r u ; ~ -ivon; si inilarly,

t ho nuubor of ofínioos ~ o t u a l l y oponod i n a i y ;rom may havo inoludod

sorno whioh woro oubsoquontly closod, so thUt tho figuras 09 "off iaos

s t a r tod" aro simila.1y unroliablo. Tho p.&g Coos not, of oourso,

~ i v o d o t a i l s oi" of5oos c lossd c'urin, aast g0~,2s, so t h a t it is

n o t possiblo t o C.di'ivo t : ~ b l o s 01 l lb i r ths ' f m¿ "doathe" and 'suild

u;) m u a l "population" f i g u r a s from thou. !l'ho f i ~ r u s i n tho tab lp

would oor roc t ly ~ t ~ t o tho nuo'sur o2 b.n::in; o i f i c d s t h o i r

growtb yoar by goar only i f oaoh yoa r l s c losuros woro n x m t l y oqual

t o tho numbor of o_*=icos whioh, s t r r t i n , i n t h a t yoar, &id not

survivo t o tho :iru~;oiit;i an& thoro i s no ruason t o assuao t h a t

suoh a romxc:cablo coinoidonoo ooourroí i n al1 t h s yoars un&or aon-

s i d i i r ~ t i o n . Howovor, i t doas soom t h z t vory s"ow closuros took

plaoo a l t o r tho fouiding o2 tho Contra1 2;nlc i n 1935, so t h a t tho

d a t a f o r tho lizst o i ~ h t c o n yaars i n tho -L>.blo o m bo ro~ardoci as

a roasonablo approzi i~at ion t o tho dotual nwabars of ofi'ioos and

tho gmowth fhoroin; io r tuna to ly , this i s suf2ioidnt f o r tho purposqs

of tho prosont p%;>or.

'Puniing t o tho fi;uros thousolves, i t o-in bo soon t h a t t he

nunbor of off ioos grow oontinously throughout the post - 1935

poriod, but at sud r&%s vfhioh cUffunid consi&ornbly ovor tho

years. Fron 1935 t o 1942 inoluaivo, tho mnual r a t o of ~ ; rowth

averLagod 1.7 $, with only niinor f luotua t ions around tho ilvorage

a:ooat i n 1936. in tho yo'zrs 1943-45 tho m u U l avora,o ros0 t o

3.1 S, with a peak of 4.0 $ i n 1945. d f t o r 1946, grorith 'uooaiiio

slow ci~uain; tho 1946-56 nvorcqp r a t o rraa 1.8 % viith an unusually

lo\? l i gu ro of 0.6 ,O i n 19@<9 m d a high one of 2.9 $ i n 1954. Fron

1957 onnranis, tho r<.Uo of grourth oliwbod t o s r o o o d l o v ~ l of

0.9 i n 1961, anL t h o u ~ h it f o l l oonsidorzbly in tho tvro follow-

i n g yozxs, tho 1 a s t ;Oi;uro shom (4.4 $ f o r 1963) i s still higher

t b ~y of tho 1335-56 r a t o s of inoroaso. The avorr;-o nnnual

r a t o f o r 1957-63 mas 5.9 $. Thus, 7:ihilo it i s qui to aloa t h a t

t h o pb,yaioel apg?.rn%us o i b d c i n g has o q m d o d a t m unusueJly

rapid r a t o sinoo 1957, i t i a not so obvious t h c t gro~vth h ~ d been

ro¿\lly unprooodentodly slow i n tho ton yoi,rs boforo t h , ~ t ; the

1947-56 svorcye r\."to of inororse vras about the scne a s t h ~ t of

the 1 9 3 5 4 2 period. Homovor, t he l s t t o r o o r t c i n l y appoms rn tha r

low oorqurod uiith the g r o i ~ t h retos shown f o r tho 1S2018, vihioh

avor~%u 4.1 $ l o r g o u f o r 1920-30 inolusivo. For mcsons

aLroa3.y &ven, tho d..tr f o r tho 1 twontios mst bo ro~arclod as

los8 r o l i n b l e thi-n thoso f o r tho post-1935 period; but they crt

l o c s t oonvoy a gonaxd io,rousion, whloh oould hnrUy 'so vary

di f forent f r o n t h a t ohioh viould Elriso I rou the t r u e r i í u r e o i f they

.ere ~ ~ v a i l a b l o , of P. ra+e o i oxpmsion apgroprlnto t o o P d r l y

grosporous eoonouy; i t u ~ g , tberefore, be roasoneblo t o oompam

t he low growth r?.tos oi 1947-56 with thoee of tho 1920-30 pariod

r.::ther than vslth thoso o: tho flopressüd ' t h i r t i o s . On t h i s c o w

prrrison, thoro 1s uo-o t o bo s a i d f o r tho viorr t h n t tho ;,o&-1957

or-swsion was ndziii:; un ~ r o u n d l o s t i n tho provious ton $oms.

The f igurds i n Tablo 1 a re mrom-tho-board t o t . l s úrhioh in-

oludo e v o 4 U n & o: bmlin;; offioa. Bit ohLmgos j.n O l i o con;2osi-

t i o n of these s ~ ~ r o ~ a t o u i n oouo m s p s c t s 3s into-ast ing w d

i w o r t a n t av tho ovaz~I.1 ch;.mgos, A p u t i c u l a r ozi-:a210 i s tho

r s l ~ ~ t i v o doclino i n i i - u r t i n c o o3 tho Bmoo da QL-6& vvhich

has lona boon - ~n; s t i l l i s - by f c r tho largont s i i i ~ l o o o m ~ r o i d

biinlc. In 1935, with 240 ofliooa, it i,,ossussod 35 $ o: a l 1 tho

brnking ofioicoa i n t h e oountry. 1946, i ts 8hr . r~ hncl ~.oclinoc:.

sonevvhat t o 33 $; by 1957 it h d . f a l l e n i%rthor t o 31 ,;; kit by

1964, with 350 o f i i c o s out o? a nntionnl totc.1 oio 1536, i t s shnra

hcd f a l l o n t o tho lovv T i ~ u r e of 23 $. Obviouslú, tho Bi,nco de l a

Nación has not growii i n psoportion t o the r o s t of the sastom i n

recont yearsr othor 5:21::v uust hcve ,-<:inod 2.t i t s e-,?onuo. But

vvhioh? l o ,=nsvuor thirr c~uostion, i.t i s nocossc..q t o Iawr tho m t o s

at whioh tho ciif;'ordnt t;ri~oa of b ~ n k - "off ioinl i ' , ;)rov-inci:$,

:>riv::te m d L o r o i ~ n - grow Luring tho period s ince 1935. Tboso

a r o shom i n 1;,31o 11 bolow.

Tho f i g i l o s i n t h i s t A l o shov? qui to c l o a r l y thr.t tho cx;gunsion

of the b a k i n z op2ar::tus has ooourroci n?.inly mong tho ;?rovinoiii

bLul%s, who~lo of i icov hL,,vo Srom i n nuabors f n s t o r t i i m thoao of ~ n y

other t y p ~ . Pr iva to ,covinoicl b&ks grew f c s t o s t , 'mt vroro

5 o losely folloviod 57 t l o "ui:;edU W e ; o I f i ~ i r J ;~rovincir,l banks, F

though ooming th i rL i n t;m rwo, wero a 10% w~ay behind i n terras

05 t h o i r r a t a o2 .rowth. National oZZici..l b d : s los% almost sil

tho ground cal>-turui. by tho ;>rcv',noiul 5an2ss p r iva t s bmlcs i n tho

Capi ta l (both k ~ ~ a t i n u rsnd i"oroizn) l o s t sowo, but not iuuch, of

t h o i r sharo i n thu t o t a l nuibor 02' 5.n:;iilg officos. Thusu ch;n,ua

did not occur snoot'dy ovar timo. Tho ai.vanoo of tho privato pro-

v inc ia l b d : s tool: 2lac.o aliiiost o n t i r ~ 1 ~ i n tho yoara sinoo 19578

u n t i l 1956, it iras tho "mixod" p r o v l n c i d b d c s whioh vmro i n tho

load, with tho o 2 f i c i d p r o v i n o i d z lcdrs zrowln,: at a r a t o s l i g h t l y

abovo tho aviii&;o and al1 othiir t;r>us i;-orrlnh at bolow avorwu

rdtos.

Tho r w i d or~ci1;lsion ol privato i ) rovincial b d c n has boon offoot-

od by tho Z o u n i i n ~ of now b d d n y Liriia nu wall a; by tho s o t t i n r y

up of novv branchos by ox i s t ing f i rns . I n t h i s rospoct, too, pro-

v inoia l pr iva to bidzinc has lod thc i i c lB , j;rtwoon 1935 nnd 1956,

only ton now bm:dng ontorgrisos wuru o t ~ r t o d i n tho wholo country,

but f r o a 1957 t o 1963 no fawor t h m tliirt3--suvcn oamo i n t o oxiston-

oo, of which nino-tüon ivc,-o nuw privato :>rovincial b d c s , f ivo woro

"odxodl' and throo viora o f f i c i a l provincial 'otd:s. This moans t h a t

of tho 55 :>rivrit.o -.rovinciUl bmlrin;. f ircis i n o p r a t i o n i n 1964,

mor2 than a thirS. i - i~ro f oundod irit:lin tbo pravious suvon yuars.

Tho ro la t ivo i n c r o i : ~ ~ YPYS tho BYUJ iii tho oasa 02 "mixuá" provin-

o i a l banlcs mi, o: "orign bCml~s o~jonin, brjnchos i n ;ircontina; i n

cach Group, f i v o o: tho Ziftoon bui1::s vrhich vioru carryin, on

businoss i n 1964 had. boon s t u t o c ; sinco 1957. Off io ia l p r o v i n c i d $ .. t badcs nuuboraí. oluvcin i n 1964, anc o: - thoa~ , throo woro foundod e 5 i n tho 1957-63 2orioil. Novortholoss, booauso tho nuabor of k ?< !$

0e.0 - i i o e s rose a t i l l f;i::ter t h m t h e nuuber oP bnnking firme during

these yenrs, t h e aver tze nuuber of brmchee per bznk a o t u a l l ~ rose

from 12.26 t o 12.69; f o r p r iva t e bmka i n t h e 2rovincea, t h e corres-

i~oncli;~ng average3 were 3.2 i n 1957 and 3.7 i n 1964. rit tiae begin-

n ing of 1957, tvientpnine out of t h e tkirty-si: p r iva te ~120Vtn~i ' l

bmks had only one oP;?ice, 'wd t h e l a rgeu t b d t had o n b seven; by

1964, t h e number of s inzle-off ioe bUnlcs had f a l l e n t o tventy-tvro

out of f i f ty - f ive , m$. tl?e lai-gest b;nk ha6 n ine t t en offioes. For

t h e banldng eystem as a iihole, the ohtmge i n t h e e i tun t ion ie

auuaariaed i n t h e f o l l o i r l i i ~ table.

PYRC XTAGLa OF BANICL JITX TOTAL -------- Year u i e 2 - 5 6 - 15 16 - 25 25 o r ?UI!aJ? OP

of f ioe o f f ioes oPPices o f f ioes more BlUCCb

Proa t h e f igure2 i n 'Il;,ble 111, it vvould seen t h c t t h e

unequal i n 1964 t h m i n 1957; the developinents of reoent r e n r s

have put more bLs::s i i i to the iiiiddle-siaed groups 'm6- left r e l a t i v e

l y fewer a t t h e ezti-cuco. U1 the o'.ae, t he re .lre a t i l L very wany

sinzle-offioe ban!:s i n ~ i r , p ~ t i n e , and t h e syetem oontinues t o be

i o ~ i n a t e d ( i n the nunerical sense, n t any r ~ t e ) by bii; b d c s with

evtensive brmoh syctoari: i n 1964, t h e fou r b i ~ s s t ( t h e Zl~noo de

l a Naci6n and the provincial bc@m of h e n o s dires, Cbr&oDa md . < >anta -6) t o t a l l e d 6Ü5 o f f i c e s between theP - i.e., almost 45 70

of a l 1 b'mking o f f i cec i n t h e oountr~r. It i s t r u e t h n t i n 1957

- their coabined share i.r;~s g r e a t e r - with 521 of f ices , they then

posaessed 56 5 of the nrs-Liana1 t o t a l ? nevertheless, t h e fa11 i n

t h e peroentnge has boeii nomhere neclr sufz"icient t o romovo t h e ei-

treme divergencias i n s i z e lrhioh c o n s t i t u t e suah a not::ble fe,:tuze

of ilrgontina' s brdciny: st;zicture.

A l 1 of t h e f o r e ~ o i n , i.ircussion has been i n terma cf t h e

nunbers of o f f i c e s :>ossoose< by t h e var ious bmking f i rus . This

i e , 02 course, by no mems t h e only way, md not neoess~ i r i l y t h e

beat way, of aoasurin;, $ho s i z e of Dcnlcs~ sone oornparisons i n

t e r n e of t o t a l a s so t s ami t o t a l de;>osits may be use fu l at this

poiilt. The four ba2:;s inontioned i n t h e last p m ~ r a p h t o m t h e r

ha& 55 5 of al1 depositv i n 1957 ana 43 $ i n 1963 - prono-tiona

nhioh correspon6 f a i r l y vrell with t h e i r s h ~ i e a i n t h e n,,,-tional

t o t a l of bmking ofc ices i n t h e two years; howevor, t h e i r shcxe

l n t o t a l tiaeets was only 37 $ i n 1957 m& 30 $ i n 1963, 'ueoause

of t h e f,%t t h a t t h e il;:tioii;.,l t o t a l of badc a s s e t s inclurles those

of c e r t s i n i n s t i t u t i o n s ( m c h cs the Eknoc In&ustri& urid t h e g- co ; I i .c tecmio Xacio_nl) rrhose üeposi ts f o r u a much s m d l e r p ro% --- t q e of t o t d a s s e t s t';rt.n those of t h e comeroi ,d bo&s 2ro;,er.

It should be note*., too, th,:t tho fou r b d c s a r e t h e 1 2 . r ~ e s t only

"Al1 t h e f i g u r e s uent lonei i n t h i s pwagraph are dei-iveii from t h e Boletin Xsta.díntico 601 J. C. ñ. L., January 1964, Table VII.

i n terms of t h e nunber 0.2 offioos they possesa; i f %e o r i t o r i o n

oi? s i e e were the naount o; t h e i r de-osits, t h e Banco ¿e l n I;-&i&

-C. t h e Banco de l a Pro-noin de &enos Airea would a t i l l oocu:>y

tho first two plaoei, 'out t h e Bnnoo de l a Provinoir de Córdoba

vrould f n l l t o olevonth plaoe a& the %o Provinoicd-de 3nnta F6

t o t e n t h plaoe; tho Sr.moo Lspnffíol d e l Rio de l a Plz tn ?A& the S- oo ile Italia y ii$o--&e 1~ Plctg would move up t o t h i r i ald S&h,

evon though t h e nuubcrs of t h o i r o f f ioes were fifty-two mil fifty-

s e w n respeot ivoly as ooü_wed wi th Cbrdobn's eighty-nine nnd San-

t.. 761s seventy. Thc &oo &e Londres a d t h e Banoo de G n l i a ,

whoso deposi te were i n eaah oase only s l i g h t l y l e s s t k n those of

tho Dmoo de I t a l i a in 1963, had only th i r ty -me ~ n r l tvienty-ono

oi"fioes respeotively. This inper feo t oor ro la t ion betvveen deposi ts

y id of f ioea moms t h a t oon~i<.omble differenoos 'are t o be Gpeoted,

bokroen one bunk ,md ~ n o t l i e r , wi th res:>oot t o t h e nvorwo leve1 of

depos i t s per banking oilfioe; some implioetions of t h i s v i l 1 1 be

notiood la tor .

B m w h i l e , i t m a y be usefu l t o @ve n rough indiont ion of how

t h e zrowth i n tho num.>ers oZ b,n!cing of f ioes has boen d i s t r ibu tad

nmong tho var ious r o ~ i o n s of t h e oountry. Table 11 does not, of

oourse, &ve any U r e o t evieenoe about t h i s r i t o l a s s i f i o s banb

only aooording t o the 1ooc.tion of the head offioe. Bit the Ban-

oo de l a NaoifSn, f o r e;r~'m:~le, hne branohes throughout the oountry;

md mnny S&s, r i l th hezd of f ioos i n one pxvinoe , have oi?i"ioes

i n others. Vhen b&Any o f f ioes a r e o l a s e i f i e d by provinoos,

Number of b ~ n k i n ~ of'ioes ITo, i n 1964 Provinoe n t beeinnine of a s poroentage

19 57 19 64 of no. i n 1957 -- -------.---.-- - C v i t d 17 5 254 156.6 h e n o s Aires:

"Oran Bs.ha." 47 113 236.2 b s t of province 242 352 145.5

C6rCoba 11 J 164 139.0 Corrientes 29 39 134.4 Zntro Ríos 72 00 111.1 iiendosa 31 41 132.3 Snntc Fe 119 154 129-4 l'ucum~n 35 38 10U.6 Other provinoes lL4 301 163.6 ---- ~ ~ t a l 1.042 1.536 147 4

The t a b l e br ings out t n o s t r i k i n g oh;..rwteristics of t h e

post-1957 periodr Iirst, t h e rapi,id growth of bm:zLng ofLices i n

t h e pnrt of Greater menos U 2 e s ou t s i r e t h e C z p i t d i t s o l f , tnd

seoondlg, t h e f a o t t h a t e;:?>msion i n t h e i n t e r i o r of the oountry

has boon muoh f a s t e r i n t h e smaller, outlying provinoes t h m i n

tlis 1 , l r ~ e r ones. In none of t h e la rgor provinoes d i d the number

oi. bcnl:m o f f ioes grow as I a s t a s the na t ional aver:.@. The pro-

vinos of aienos N r o s , tL:en a s a diolo, grew f a s t e r ( i n 1964, the

number of o f f i cos w 2 s 1 6 1 7: of t h a t i n 1957) but t h i s was U~ie t o

the exoeptional ~ro\- i th i n the ü i s t r i o t s a d j w e n t t o the C a p i t d ;

%he rest of the proviaoo fe11 j u s t shor t of the nationnl growth

wlth ofi ioes i n 1957 m& h d 28 by the baginning of 1964, md

ormosa i n Santp Cruz where 7 o f f i o e ~ i n 1957 beoame 19 i n 19641

and 31 dhmo both more thon Coubled the number of t he i r ofPioes;

s o &id Chubut m d Río Negro. However, there were some exoeptions;

La ELioja, S ~ n t i ~ s o del Estero and >al ta wero below avera;;e ( t he i r

1964/1957 geroent-i ivere 137, 120 and 133 respeotivoly), while

Jujuy (150) only just ozoeeded the national figure. In all, eleven

out of twentpone provinoes (loaving aside Benos &res and Tierra

del Fuego) g m w f?.ster than tho average, but those e lewn povin-

oes togother possessed only 15 1& of the oountrgta bJn;cin¿. of."' + L O ~ S

even i n 1964. Taken a s a vrhole, fhe i n t e r io r ( i n the sense of d1

the provinoes ercept f o r the part oP &enos Aires a&jaoent t o the

Capital) grew a t just uneer t ae nn t iond ra te i i n 1964, the num-

ber of offioes i n tho incurior víc8 146 '$ of 1957. For "Greator

aionos Aires" (i.~., tho Capitcll plus the adjoining oountiea) tho

peroontsce mas 165 $, but th ia was mostly &ue t o ezQmsion i n the

L i s t r i o t s outsiae the Capital) whoreas, i n 1957, 79 $ of Greater

Buenos &res' bdc ing offioes were s i t u ~ t e d vrithin the Capi td ,

b r 1964 t h i s .peroentgo h d fa l len t o 69 5.

Table IV, then, sorves t o oorreot a f a l s e im;~rossion whioh

might be derived Srou Tnble 11. Though it was the private provin-

o i d b&a wbioh a f to r 1957 ahowod the lcrrgest progortiond in-

orease i n the numbor of the i r offioos, growth was f a s t e ~ t not i n

the i n t e r io r but i n Groater &enos Aires.

One l a s t point met be notiood bofore this desoription of the

g r h h of Argentincia b&ng networlc is oonoludod. Thc llbanMng

offioon" onumortltod i n t'no var ious tabloo üro a hdtdrogonoous

ool loot ion of ha& o:;7ious# b m o h o s # a;;onoios, offioi?s~2ologa-

t i o n s and ovon tho "nobilo ~ . m c i o s " vrhich aro housod i n raotor

vohiolos a d novo f r o a 3lwo t o plaou within a 6o:inud asoa. A d n

wi th in a s in& outd;ui--7 r 9 such as ' L ~ ~ n o i ~ s " , thord aro boune t o bo

ocnsidorablo v i s i a t lonü i11 tho nuinbdr oL cooounts, thu t u r n o v a of

doposits, and s o on. This uoans t h a t ii mara clzmgo i n thu t o t a l

nunbor of b ü n ! d n ~ oi'i"iouu 1500s not 2rovii.o a unii"orm ~~~~~~o of tho

,-rowth of bdn;:ing YU~W.O~S i n a &ivon aroa. Thoro sooms l i t t l o

roason t o sup;>oso t h c t thu auount of businaso hruiálod by ono typc

of oPi"ioo is nocossar i lg l ~ ~ i - g o r o r s m d l o r th .n t h a t of somo 0thdr

typo, so no ofioi-t hao b ~ a n wUIo t o s~-;~r,-io t::ioui i n tho prssont

iuialysis; but t h i o hoturogonoity should bo Uorno i n mind i n any

disoussion of tho i i ~ i i r u s u?'kioh havo bcoi? y ~ : - o i 1 t ~ C .

Can tho post-1957 o:r,~~nijion bu ~ d o c ~ u ~ t o l : ~ o,:,lUinod i n t o r m

of tho "bUoklog thoor;si' roforrocl t o a t tho ' b o ~ 5 n n i ~ ? Undor tho

r6glmo of "doi,,osit n ~ t i o n d i n a t i o n ' ~ of 1946-56, tho oommomiai b&s

woro roduood t o tbo s t a t u s oi" *unta of tho Contral B<.nk,, on whoso

bohalf thoy ruooivoC. í-rt-~osits and &O l o ~ i l s t t h u i r l i b u r t y of

ao t ion w a s ros t r ic . to i t d tho ü n ; ~ o a a l oi" t h o i r ovm o a p i t a l anb

rosorvos. 'Pho o f Z ~ o 2 wan t o oliminatu ~arq inoontivo f o r thu

banks t o sook f r o s h 'msinoss; sinoo now moouilts m ~ r o l y didaod t o

t h o i r a ü a i n i s t r ~ . t i v o oobts Mthou t imovlíiin, thua \ a t h loanablo

,. .. riosouroos, thoy r i o r ~ unwill ing t o opon t h u ; md, a f o r t i o r i , 'L. -,.< S?. w no inoontivo t o s o t wp now ;̂iooe. T ~ O r", .

,~ .S - . h.. q:,, ~,..

?. : e*-> ,. s.- .-

Central Bnnk ooulci presumably, had i t so wishod, hnve arranged f o r

suoh a stimulus t o bo ~ i w n , f o r ozample by aome s o r t of paynont

t o tho b&s of poroontr;o ooa,~issiona on dopos i :~] but the ~ u t h o r i - t i o s do not seem t o havo t ' s o ~ ~ & t muoh axpnnsion ncoessary, r n C i n

any oaio 2roferred thu t i t should td:o plaoe through tho groi*h

o? o f f i o i ~ ~ . l b~nks . Though tho system a s a wholo axp,niLod 'cy nl-

most 21 5 pr iva te bnni:s Gmxr oniy 7.4 ovar t h ~ ~ e yonrs, a s oou-

parad uvith 17 '$ betvvosn 1935 nnc; 19458 so i t wirs t o be oxpaotod

tha t , when tho systam was rolormod i n 1957, t h e pr iva to b d s

would be l o d t o orp~n1-2 oiloo ~ a i n i n tho o f f o r t t o seoure new

businossi m d a s hns boon soon, t he ~ rovr th t h a t fo l lo iv~d vvas prr-

t i o u l m l y mnrked i n tho privcbto b.dcing soot or.

Tho ronl quostion, hovíovor, i a the e;atont t o whioh tho post-

1957 growth o m be oxplainod i n t h i s ura~. If i t should turn out

t h a t only (sny) 25 $ of it onn be so a t t r ibutod , i t w i l l bocomo

important t o look f o r othor 2ossible oausos. On ono vory simple

approaoh, it would seom thn t tho axpnnsion wea i n f m t a good d a d

ln rgor thcn t h a t vihioh v7ouI.S. havo t&en plaoe i f the b d a had

boen mcroly o?.tohing up on tha bociklog whioh aooumulatoS. Qiring

1946-564 If tho numbor o l b&ng of f ioos h d expandad i n tha t

~ o r i o d a t t he sama r a t o as i n tho yoars 1 9 3 5 4 5 (i.e. by 27 ,:), the

oountrr as a whole would havo hhad 1.095 b&ng of f ioes in 1956

inato3.d of the 1.042 whioh aotucllly ex is tcd a t thnt timo; the

"baoklo~;", therof ore, would h?,va boon only 53. It must be assumod

tht soma s o r t of "norm,dl' ex-xmsion víould havo been going on af-

t o r 1956, qui to apat from t h a t noeded t o moko up the booklogr il

tho 1935-45 r a t o of incroc.so h d i n fwt p r o v d l e d r igh t up t o

1963, the numbor of o f i ioes i n tho t year would haw been 1.265; so

normd growth, plus tho 1156 baoklog, vvould have o d l o d Por 243

now off ioes t o bo a t a r tod i n the 1957-63 period, as oomparea vdth

tho ac tua l f iguro of 494. It soems, on t h i s approaoh, t h a t the

"baoklog" t h e o r j ~ a o o u n t e Por only half of the reoordod exlanaion

of t h c biuilcing system &urinc theae yome. Howevor, t h i s 1s

obviously unsatisi"aotor3.. ;ihy ahould t h e b;uiking syetom, if i t

h d boon cblo t o onp~wd f r o e l y & t e r 1946, have oontinued t o do

so a t no more t h m the 1935-45 ro te? Pho growth of i n d u s t r i j l prg

cluotion, both i n absoluto torne m d a s a propor%ion of n a t i o n d

product, i n ~ l v e d the aottinG-Up of new entorprisos with now noode

f o r b d c i n g servioes; i t d s o , by onusing ch'mgoe i n tho looat ion

of coonomio ~ o t i v i t y , oreato2 requiremonts f o r new bUnking ofiiioae

i n doveloping areas, pn r t i cu ln r ly i n Oroator Bumos Biz.os i t s o l f .

It has alroedy been ~ o i n t o d out tbt the r a t e of inoreaso i n tho

nuubor of off ioe8 was notiooably higher i n 1943-5 t h m i n the p-

r ioL 1 9 3 5 4 5 as a whole) m d those vvore yeare i n vihioh i n d u s t r i a l

output and oizpaoity wore crovdng f a s t e r t h m they hnd done ear i ie r .

If the 1943-5 averogo grmith ra to , 1.e. 3.1 5& had oontinued ovur

tho onriuing t e n years, tho tot 'd number of of f ioes i n 1956 would

h ~ v o bosn 1.158 ins tead of 1.014 and t h e m would have been a

"baolclog" of 148 off ioea, C o n t i n u i n ~ growth at 3.1 por year

vvould havo givon a t o t a l nuribor of of f ioes of 1.433 f o r 1963, &.e.

M inorease of 419 ovar tho ~ m t u a l 1956 f iguro -the 419 boing made

up of 275 z r i s i n g froill the grovrth t rend of 3.1 5, plus the 1956

baoklogi cf 148. Evon t h i s f igura, oaloulated ori nuoh more

gonorous assumptione than tho o a r l i o r ono, l a a 4006 doal sho r t

of tho m t u d 195743 inoroaao of 4941 i n t u s oaso, tho "bnoklo~"

theoqr fails t o aooount Yor 15 55 of t h e a p u n s i o n o l t h e banlrinc

notvíork.

11 t h i r d Gpproach might bo t o aoo whnt hep-enod t o tho a v o r q o

amowt o2 do;josits por b m l c i n ~ o f f ioe ovor tho years -doposits boing

adjustod t u olilidnato tho o?:oot of p r ioe -1ncroases. TaBle V,

b o l o v ~ , ' ~ ~ v a n t h i s inforuxation8 tho figurou aro n i l l i o n s of 1960

pesos.

Yoar 1943 1944 1945 1946 1947 1948 1949

uaposit a por 0iO2ico 266.6 301.1 299.5 292.9 273.7 312.8 293.1

Yoar - 1950 1951 1952 1953 1954 1955 1956 ..-.- --------.o "-

Deposits por &i"ico 272.7 217.6 1V6.7 219.3 249.9 302.5 314.7

- . --- - .- Yoar 1957 19.5: 1959 1960 1961 1962 1963

Do-osito !

por olzioo 269.4 271.9 165.4 164.3 145.4 109.7 116.9

?Joro, t he thoory is t h ~ t tho tot t i l amount of " r o n l d o ~ o s i t s " 1s

a momuro o: tho 7 ~ 0 ~ ' : boirq dono by tho 5;uild.n~ aystom i n p r o ~ i s i n g

tho ooonomy with uoms of paymont. 1: ron1 doposi ts and tho numbor

of of f ioos brom i n tho SUDO pro:>ortion, so thn t dopoelts por of-ioo

do not onan;;o, it can bo aseuoaid t h a t tho b d d n g notwork i s a'aout

tho r igh t s izo (54von tho o o ~ t s o2 -,rovlding b u n k i n ~ s ~ r v i o o s ) t o

muu t tho cio¿l;w<Is mdo on it. A í;roving vooonomy w i l l r o i u i m mora

mortns of gqruuiit, uvon i f thii prioo-lovul rYmidns oonstant; il tho

numbor of bm:lng off ious i a not ,ro:niic i a s t cinowh, t h i s vi l1 bo

shom by a r i ü o i n thii 2iguru of ros1 io-os i t s por officu. This

eootw t o hnvvo boun tho oaoo du-in; most of tho puriod up t o 1356,

though thoro mas a wrkod f d l i n ¿.oi~ooits :xlr off ioo i n 1951-3;

but tho lovi Z i ~ u r o s ocourring from 1959 onwnrüs auggost t h a t thu ox-

pansion of tho bcrllldng appariitus i u u th;iii .>rocoodinz a good doal

f u t o r than t h o 2,lymonts n o d a of tho aoonoisy would o rd ina r i ly h ü v ~

d io t s tod - 1.0.~ t h ü t i n thuticr 1~:-t ;..;i,.i.u t h u nuubur oZ off ious hui

moro t h m uüi.o coa; tho 1946-56 bm:do,.

Thp t roublo ~ ~ t h t h i s a p ? r o a ~ h i a th< i t i t doos not d l o w f o r

short-run polioyin&uood o h a g o r iii titú voluno of r o d bank 6070-

sits. Ii thii l a t t o r dways boro soim &.>lo rcilr,tionship t o l o n p

run t ~ n d ~ i n nntion;:l profiuot, poc~ilntion, oto., i t would cor-

t a i n l y bo a unü:ul s i d o t o tho alogropriato s i s o of tho b d c i n g

nutwor!~. Uni"ortunatoly, tho au<hori t ioa may tako ctotion bo ruduoo

it (as a r r t o:' cm a t i - i n f l a t i o n a r y polia:r), and sinco tho numbür

of bunlcing o 2 i o o s orurnot bu .$.justiid i d t h t h c sdmd ra-pioity, tho

I i ~ u r o o2 "i-o>oaits 2or or"Zioox irill a ~ ~ t o o a t i o ~ l l l y f d l ovisn thouzh

tho bddn ; . nü%I-lork mciy i y t u s l l y 'N t o o ama11 t o sc~rwvo thu lo tyr run

noods of tho ooonow.

An alternativa ap;?i'o;nh, wbiah part ly avoids theoe &i3?3.oulties,

l a t o examino the rali.tionship betvveen population and the number

o? baddng offioes, on the assumption tha t the two ought t o bear

sone def ini te re la t ion t o oile onother. The neoesaary data are

2,ven i n the following table.

---- - - -- - Year .----

1943 1 9 4 1945 1946 1947 1948 1949 1950 1951 - -- -- -- Inhabitants 2er ofziae (thoussnds) 18.9 1V.S 10.6 18.2 18.1 18.2 12.4 18.0 18.9

Year 1952 1953 1954 1955 1956 1957 195C 1959 1960 -.-.- .- -

Inhabitants per ofl'ioe (thoussnda) 1U.9 19.0 10.9 18.7 10.8 18.9 lC.7 12.2 17.4 -- ----- --- A-

Year 1961 1962 1963 - - ---. ---- --e-

A &ven leve1 oY po-lation ( i t oan be a r ~ y e d ) w i l l be assooiat-

ed with a given nunber oi bJnlr aooounts$ as inoome per head r ises ,

and as paymenta ha~its ohange so that more people use b&zIng faoi-

l i t i e s , that numíier i u i l l tend t o Ase, aud the population tal1

require more bmidng o22ioes t o handle the inoreasing business8

but even i f t h i s tren<. i o not strong, the nuinber of offiaes needed

oan be expeoted t o r ioe as population grows. This i a equivalent t o

smng tha t the -po?ula-tion per banking offioe ought t o reuain

f a i r l y stable or elne nhould tend. t o fa l l , depending on the grovrth

or" inoowe per heaa and the growth of the I1bttnkfng habit". Swh a

downward trend was ocourrins i n 1943-7, but was then revorsed, with

the po'pulation per oi f ioe reaohing a peak i n 1953 an¿ reuaining

quite high u n t i l 1958, &te r whioh i t deolined sharplzr un t i l by

1963 i t had roaohd. a leva1 whioh was only 73 $ of the 1953 pak.

Ií? the o r i d n a l 1943-7 trend ha& oontinued, the fi- would have

been down t o 17.000 inhabitants per ban!dng offioe by 1957, and

by 1963 it wouid have been about 16.000. This suggests that a

badclog og OemanG was aooumulateL during 1947-57, and w a s more th+

disohargeü over t'ae p a r s 195&-63, sinoe the aotual r"i&ure f o r 1963

i s l ea s thgl the one r~hioh would have been reaohed haci the ea r l i e r

trend oontinued. btb more, it seems that the "baaklog theoryl' i e

not suffioient t o aooount i n jW.1 f o r the expanaion b the banking

apparatus whioh tool: -,laoe &ter 1957.

It must be emphaaisu6 thdt none of the argumente &vanoel

above oan be resarded as very oonolusivej they are al1 evtrsr

polations of one sor t or another, wiith the im-glied aesumptim that

some lloorrectN or equiliiírium v d u e prevailed d u r i ~ the ea r l i e r

yetlrs from whioh l a t e r v,.lues are being extrapolated. ~ i thou t

much more detai ler l i n v e s t i ~ a c i o n (e.g. of banicing costa, and of

the r e l a t i o n bet-¡reen GNP, aopulation, deposi te and the nuaber of

baJi.-;tng offioen) i t i s in;,,ossible t o j u s t i f y s w h assumptions. It

nould be qu i t e imgro:?er t o úraw the o o n c l u s i ~ that Argentina now

has too uany banking o-iices< there might be something t o be sa id

f o r the view t h ~ t she has too many banicing firma, o r t h a t t he ex-

pansion of o f f ioes has not been w e l l d i s t r ibuted , ixit these are

d i f f e r e n t questions. It oould even be ar&ued t h a t t he oountry's

'omking o f f ioes a re still too few i n numbert f o r escimple, !?hile

Argentina had one bm:zing o f f ioe t o every 14.800 peoale i n 1963,

the United S ta t e s had one t o every 6.700 and the UniteB Xicgiom

had one t o every 4.000) o lear ly , Argentina has a lon, viay t o go

before she approaohes the leve1 of banldng s e i ~ i o e s alre* ezist-

i n ~ i n developed couiitries. 'Phe fao t t h a t auoh a l a r - progortion

of her money su'pply o a i s i s t s of banknotes and ooin r a the r than

banl: deposita a l s o su,cotn t h a t her banking system ouoht t o be

e;:tended a good Leal fur ther*

Nevertheless, tilere Coes seem t o be some ground f o r the a s s e r t i q i

t h a t the erpansion :rhich hys ooourred s inos 19.57 re.sresents more

tlian jus t t he o a t o h i n ~ q p on erowth whioh had been impossible i n

e a r l i e r years. iyhat, then uuas the addi t iona l grovith-induoing faa-

t o r ? One obvioua s u s ~ e ~ t i o n a r i a e s from the i n f l a t i o n a r ~ r oonditions

of the period, uiiPer rrhioh eaoh baillc had inoentive t o inorease ' i t s deposi ts a s muoh a s possible; the s t rong inter-boa:: o o a ~ e t i t i o n

víhioh d e v e l o ~ e d n a t u r ~ l l y l e d t o the s e t t i n p u p of new o f f ioes i n

t h e e f f o r t t o oa2ture more business* Another poesi'oility i s t h a t

the chiuí~ee i n the sti-uot~sre of the eoonomy whioh went on i n the

1950's and early 1960's were suoh ae t o o a l l f o r a muoh largor

use of ban;;ing fao i l i t2es than formerlyr Por exaaple, a t t em~ta *O

s t i m l a t e a+&culture 'by providing bet ter oredit f a o i l i t i o s m a y

have been par t ly respon~ib le fo r the extension of the b d d n ~ net-

wor:c i n the provinoea. Ti10 writer hops , i n a fur ther pa;>er, t o

exmine these possibi l i t ies i n p e a t e r deta i l r a t present, it i a

h o s d tha t the analysis ali 'eaQ presented with r e g a d t o the post-

1957 growth of tho systou v a 1 1 have the e l feot of stiaulatin¿.

disousaion and further resotzch.