The Real Impact of Improved Access to Finance: Evidence from Mexico

53 Pages Posted: 26 Jun 2013  

Miriam Bruhn

World Bank - Development Research Group (DECRG)

Inessa Love

University of Hawaii

Date Written: December 6, 2012

Abstract

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.

Keywords: Finance and Development, Entrepreneurship, Banking

JEL Classification: G12, O12

Suggested Citation

Bruhn, Miriam and Love, Inessa, The Real Impact of Improved Access to Finance: Evidence from Mexico (December 6, 2012). Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2285013

Miriam Bruhn (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Inessa Love

University of Hawaii ( email )

Honolulu, HI
United States

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