We study the resilience of banks to macroeconomic slowdowns in a context of lax microprudential regulations: Colombia during the Latin American debt crisis of the 1980s. We find that numerous banks underperformed during the crisis, as their shareholders and board members tunnelled resources through related lending, loan concentration and accounting fraud. These practices were enabled by power concentration within banks, lax regulation and the expectation of bailouts. We provide evidence for this tunnelling mechanism by comparing the local banks and business groups that failed during the crisis, the local banks and business groups that survived the crisis and the former foreign banks – all of which survived the crisis. The regulatory changes enacted during the crisis also lend support to our proposed mechanism.

Estudiamos la resiliencia de los bancos a crisis macroeconómicas en un contexto de regulaciones microprudenciales laxas: Colombia durante la crisis de la deuda latinoamericana de los 1980s. Encontramos que múltiples bancos se quebraron como resultado de préstamos a accionistas para comprar empresas, concentración de préstamos y fraude contable. Estas prácticas fueron posibles gracias a la concentración de poder dentro de los bancos, la regulación laxa y la expectativa de salvamentos. Nuestra evidencia para este mecanismo surge de comparar a los bancos y grupos empresariales que se quebraron durante la crisis, los bancos y grupos empresariales que sobrevivieron a la crisis y los antiguos bancos extranjeros – todos los cuales sobrevivieron a la crisis. Los cambios regulatorios durante la crisis también son coherentes con el mecanismo que proponemos.