Archive for November 3rd, 2010

Venezuelan Government Banks are stingy with loans

November 3, 2010

One of the arguments, which we know is false, for taking over and nationalizing institutions is that they are not socially responsible, productive, etc.. You have all heard the reasons. But the Government has turned out to be a terrible manager. This graph from today’s La Patilla (Which BTW is getting better and better except for the girl pictures):

shows how stingy Government banks are at lending. You can see in the y-axis, the percentage of intermediation (loans to deposits) of the top twenty banks in the system and in the x-axis the percentage of official, Government deposits.

As you can see, three of the four Government banks which are in the top twenty category by deposits are the worst ones in lending. And the fourth one is Banco de Venezuela whose intermediation ratio has been deteriorating significantly since it was taken over by the Government a year and four months ago. At this rate it will join the other three.

This shows what a waste of money and effort it has been to make these banks grow and absorb others and/or buy them. The private sector is and has always been more efficient at doing its job and this graph simply proves it.