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Summary

The fifth chapter of this book reviews the earliest banking crises experienced by different Latin American countries. The impact of the financial crisis of 1857 in Havana and Rio de Janeiro represents a clear case of transmission of a crisis from center to periphery, and allow us to speak of international financial contagion. On the other hand, the panic of 1864 in Rio de Janeiro was a notable example of financial imbalance with domestic roots. In the mid 1870s another cluster of financial crises ricocheted across Latin America. In those years, a series of bank panics occurred in Argentina, Brazil, Chile, Uruguay and Peru, accompanied by local stock market panics, currency crises and the abandonment of convertibility schemes. The most catastrophic financial debacle was that of Peru, where a dramatic debt default coincided with an exchange crisis and the collapse of the banking system in the years 1876–1879. The review of these early financial crises allows us to reflect on the diverse trajectories of Latin American banks and the possible causes of their relative fragility before the end of the century.

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5 - The First Panics and Banking Crises in Latin America, 1857–1878

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5 - The First Panics and Banking Crises in Latin America, 1857–1878

Summary