Description

In this article we look at factors that could explain why department stores in Chile provide extensive financial services to their customers, and compare this situation with that in other countries. We believe that the success of department stores in Chile responds to several factors acting simultaneously; for example, asymmetric enforcement of financial regulations (stricter towards the banking industry), low bankarization, and good management. Consistent with a model of oligopolistic competition, neither can we discard the hypothesis that the rapid expansion of the department stores’ credit services is in part due to the banking industry’s little interest in extending their credit service, at least during the early years, to lower-income customers because of the externality that this would have imposed on existing customers. The available data makes it impossible to rank the importance of all these factors partly because they work together