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Authors: David W Conklin
Published by: Ivey Publishing
Originally published in: 1996
Version: 1998-09-15

Abstract

The Bank of Nova Scotia faced the decision whether to expand its investments in the Mexican bank, Inverlat. In 1995, it had to write down the value of its investments from $154-million to $10-million as a result of the Mexican peso crisis and subsequent recession. This case examines the environment of business in Mexico during the time of the currency devaluation. In particular, it focuses on the factors underlying the peso crisis. Privatization of Mexico''s banks and liberalization of regulations created new opportunities, but at the same time, resulted in extreme instability within the financial sector. While Mexico offered the opportunity to become a major player in the growing Latin American market, nevertheless there were risks of major losses. (A sequel to this case is available, titled Bank of Nova Scotia: The Mexico Decisions (B), case 9A97H004.)
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Abstract

The Bank of Nova Scotia faced the decision whether to expand its investments in the Mexican bank, Inverlat. In 1995, it had to write down the value of its investments from $154-million to $10-million as a result of the Mexican peso crisis and subsequent recession. This case examines the environment of business in Mexico during the time of the currency devaluation. In particular, it focuses on the factors underlying the peso crisis. Privatization of Mexico''s banks and liberalization of regulations created new opportunities, but at the same time, resulted in extreme instability within the financial sector. While Mexico offered the opportunity to become a major player in the growing Latin American market, nevertheless there were risks of major losses. (A sequel to this case is available, titled Bank of Nova Scotia: The Mexico Decisions (B), case 9A97H004.)

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Location:
Industry:
Size:
Large

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