Minsky in Peru-unveiling the hidden financial fragility at a sectoral level

Abstract

Since the beginning of the new millennium Peru has often been described as the Latin American economic miracle for its sustained achieved growth and stability results. However, recent works highlighted the potential hidden financial fragility that Peru might be subject to, especially at the institutional level, considering the non financial private sector. To investigate such a phenomenon in more details, we build Minskyan indicators to study a sample of 59 companies listed in the Peruvian stock market. Our analysis detects different financial fragility exposures of those firms at a sectoral level and it empirically studies the drivers of indebtedness growth at an aggregate level during the 2003–2023 period. In the context of the detected financial fragility, this paper serves as an academic ground in enquiring theoretical key questions and providing relevant highlights for the policymakers of Peru.