Purpose:

To analyze the evolution of competitors in the market of Retirement Fund Administrators (Afores in its Spanish acronym) in Mexico identifying the determinants of permanence in the market.

Methodology:

We analyze Afores’ exit rates from the beginning of market functions (December 1997) using the Cox model of proportional survival risks to estimate the contribution of cofactors such as size, relative importance in the market. We also use Data Envelope Analysis (DEA) to identify the overall efficiency of the industry and the particular efficiency of each institution.

Results:

The factors that determine survival are the global technological efficiency of the market, the absolute size of Afores and if the market exit is by liquidation.

Limitations:

The study only considers observed factors related to the technological efficiency of each Afore and does not have access to internal information that could help to better identify the determinants of efficiency.

Findings:

Absolute size and overall market efficiency predominate to explain the permanence of an Afore in the market over other determinants such as its relative participation, association with a bank, relative participation in the industry, type of entry, or the system reform implemented in 2008.

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