Environment and Planning A 1996, volume 28, pages 1157-1177 'Fast money 9 : financial exclusion in the Mexican economic adjustment model S Christopherson, R Hovey Department of City and Regional Planning, Cornell University, Ithaca, NY 14853, USA Received 31 March 1995; in revised form 2 April 1996 Abstract. Research on the restructuring of financial markets in advanced industrial countries has focused primarily on the consequences of changing regulation and of concentration of capital and control. At an international geographic scale, these processes have produced strong financial centers and new outposts for capital transactions. They have also resulted in the reworking of domestic capital markets with significant consequences for the location of economic activities and access to financial services. In Mexico the financial infrastructure is 'thin' both with respect to the variety of institutions and in space. As a consequence of privatization and state innovation, a financial infrastructure is developing with important implications for access to capital by different segments of the economy and regions. This new financial infrastructure has a distinctly bimodal character. We describe the development of the Mexican financial infrastructure after financial market restructuring and speculate on the consequences for economic development, including its spatial dimension. Financial exclusion is the outcome of biases in the allocation of capital and credit. It is a consequence of institutional and regulatory mechanisms that encourage credit rationing or allow discriminatory practices by the state or in the market. Typically studies of financial exclusion start at the institutional level, with analyses of how credit is made available and to whom. But financial exclusion has deeper roots. It originates not only in discrete discriminatory practices by the institutions through which capital moves but also from the differentiated forms capital takes within financial markets and the rules which govern capital flows. We live in an era in which the rules and institutions governing credit and capital allocation are being altered. The language used to justify new rules governing capital allocation and the reorganization of capital market institutions is one of 'pure' market technology in which politics play no part. The expanding body of studies of the actual processes of rule making and institutional development tells another story. (1) They are deeply political. Because they are embedded in power relations, the new rules disrupt some existing social and political alignments and reinforce others. In some cases these realignments are intended, in other cases not. Altogether, they recast the territory (both political and geographic) that has defined state-market relations. In the contemporary global economy, it is political decisions that determine the extent to which national economic adjustment is driven by equilibrium-based conceptions of capital flows (and the rules which facilitate such flows) or takes a more strategic protectionist form. If an 'open' capital-market path is chosen, there are still numerous politically formed institutional choices which will determine the extent to which economic reforms on the market model (as an ideal type) are realized. The rules that govern finance also structure incentives to direct capital toward fixed productive investment or short-term speculative assets associated with the <*> See, for example, Amsden, 1989; Amsden et al, 1994; Armijo, 1995; Wade, 1990.