While both in the early 1980's and the early 1990's Mexico experienced rapid growth in capital inflows, the composition of capital inflows changed significantly from the early 1980's to the early 1990's. In the first period, loans from major commercial bank were a major element of the capital inflows, while portfolio equity investments were non-existent. In the early 1990's, commercial bank loans were much less important while portfolio investment from emerging market mutual funds was a major source of foreign capital.
Commercial banks played a central role in organizing and negotiating programs for resolving the debt crisis that emerged in the 1980's. In the 1990's mutual fund equity investments created a close link between investments of many small investors and Mexico's macroeconomic performance. This link creates more constraints for actors organizing a response to a crisis and raises the political stakes.
Mexican Economic Crisis