the keiretsu. This practices free Japanese firms from the short-term obligations of stocks. As a consequence, both products and markets may be permitted to develop slowly over years, as opposed to the short-term payoffs demanded by North American corporate managers. In-house "organ banks" enabled the keiretsu to overcome the weakness of the Japanese stock exchanges and channel resources to entrepreneurial ventures. The keiretsu also established insurance and trust companies to mobilize financial resources for their entrepreneurial ventures. Retained profits were allocated to new ventures through internal finance and budgeting systems. Centralized purchasing and sales organizations were used to foster markets (Lynn & Rao, 1995).
Organ banks in Japan are also sources of coordination within the keiretsu. The organ banks possess inside information that results in the efficient evaluation of risk, and thus the efficient allocation of capital. When necessary, bank managers are expected to discipline inefficient group-member firms by holding out the threat of calling in the loans or even taking control of the troubled sub-unit (Lynn & Rao, 1995).
Banking and finance in Mexico also was closely controlled by the government until Mexico joined the North American Free Trade Agreement (NAFTA). Under NAFTA, Mexico permits American and Canadian banks to open subsidiaries and invest in or purchase banks in Mexico. During the transition period that ends this year (2000), American and Canadian bank subsidiaries in Mexico are limited to an aggregate market share of beginning at eight-percent and gradually increasing to the level of 15 percent this year (2000). Market share is measured by percentage share of total Mexican bank capital. After
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