The Real Impact of Improved Access to Finance: Evidence from Mexico
World Bank - Development Research Group (DECRG)
University of Hawaii
December 6, 2012
Journal of Finance, Forthcoming
This paper provides new evidence on the impact of access to finance on poverty. It highlights an important channel through which access affects poverty – the labor market. The paper exploits the opening of Banco Azteca in Mexico, a unique "natural experiment" in which over 800 bank branches opened almost simultaneously in pre-existing Elektra stores. Importantly, the bank has focused on previously underserved low-income clients. Our key finding is a sizeable effect of access to finance on labor market activity and income levels, especially among low-income individuals and those located in areas with lower pre-existing bank penetration.
Number of Pages in PDF File: 53
Keywords: Finance and Development, Entrepreneurship, Banking
JEL Classification: G12, O12
Date posted: June 26, 2013
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