The Real Impact of Improved Access to Finance: Evidence from Mexico
53 Pages Posted: 26 Jun 2013
Date Written: December 6, 2012
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: Suggested Citation