As Ecuadorian businessman Daniel Noboa prepares to take office as the country’s new and youngest-ever president on Thursday, there is hope but little expectation that the new administration could move to dismantle the country’s stringent interest-rate laws.
Ecuador has a range of interest rate caps on commercial lending sectors that work against the country’s banks in an environment of rising interest rates.
As Larisa Arteaga, director in Fitch Ratings’ Latin America Financial Institutions group, points out, higher rates have “a limited positive impact on margins and profits due to regulatory interest rate ceilings, however they result in increased funding cost”.
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