The Economic Impact of Banking the Unbanked : Evidence from Mexico

This paper examines the effects of providing financial services to low-income individuals on entrepreneurial activity, employment, and income. The analysis exploits cross-time and cross-municipality variation in the opening of Banco Azteca in Mexico to measure these effects with a difference-in-difference strategy. Banco Azteca opened more than 800 branches simultaneously in 2002, focusing on low-income clients. The results show that the opening of Banco Azteca led to an increase in the number of informal business owners by 7.6 percent. Total employment also increased, by 1.4 percent, and average income went up by about 7 percent.

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Bibliographic Details
Main Authors: Bruhn, Miriam, Love, Inessa
Language:English
Published: 2009-06-01
Subjects:ACCESS TO CREDIT, ACCESS TO FINANCE, ACCESS TO FINANCIAL SERVICES, ANNUAL INTEREST RATE, AVAILABILITY OF CREDIT, BAD BANKS, BANK ACCOUNT, BANK BRANCH, BANK BRANCHES, BANK COMPETITION, BANK CREDIT, BANK LOANS, BANKING INDUSTRY, BANKING SECTOR, BANKING SYSTEM, BIASES, BORROWER, BUSINESS OWNER, BUSINESS OWNERS, CHIEF EXECUTIVE, COLLATERAL, COMMERCIAL BANK, COMMERCIAL BANKING, COMMERCIAL BANKS, CONSUMER, CONSUMER CREDIT, CONSUMER GOODS, CONSUMER LOANS, CONSUMERS, CREDIT ACCESS, CREDIT AVAILABILITY, CREDIT CONSTRAINTS, CREDIT HISTORIES, CREDIT PROGRAMS, CREDIT UNIONS, DEBTORS, DEVELOPMENT ECONOMICS, DOCUMENTATION REQUIREMENTS, DOWN PAYMENT, DRIVERS, EARNINGS, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, EMPLOYMENT OPPORTUNITIES, ENTREPRENEURIAL ACTIVITY, ENTREPRENEURSHIP, FAMILIES, FAMILY INCOMES, FAMILY MEMBERS, FINANCIAL DEVELOPMENT, FINANCIAL NEEDS, FINANCIAL SECTOR, FINANCIAL SERVICES, FRANCHISE, GENDER, GROUP LENDING, HOUSEHOLD INCOME, HOUSEHOLDS, HUSBANDS, IDS, INCOME DISTRIBUTION, INCOME GROUPS, INCOME LEVELS, INCOMES, INCORPORATIONS, INCREASE IN INCOME, INEQUALITY, INFORMAL ECONOMY, INFORMATION TECHNOLOGY, INSTALLMENT, INSURANCE, INTEREST RATES, INTERNATIONAL BANK, INVENTORY, LABOR FORCE, LABOR MARKET, LACK OF ACCESS, LEGAL TITLE, LIMITED, LIVING STANDARDS, LOAN, LOAN OFFICER, LOAN OFFICERS, LOAN PORTFOLIO, LOAN SIZE, LOW INCOME, LOW-INCOME, LOW-INCOME CUSTOMERS, LOW-INCOME INDIVIDUALS, LOWER INTEREST RATES, LOWER-INCOME INDIVIDUALS, MARKET CONDITIONS, MASS MARKET, MERCHANTS, MICRO BUSINESS, MICRO ENTREPRENEURS, MICRO LOANS, MICROCREDIT, MICROFINANCE, MICROFINANCE INSTITUTION, MICROFINANCE INSTITUTIONS, MICROFINANCE LOAN, MINIMUM WAGE, MINIMUM WAGES, MONEY TRANSFERS, MONTHLY INCOME, MORTGAGE, MUNICIPALITIES, MUNICIPALITY, OCCUPATIONS, OPPORTUNITIES FOR WOMEN, OUTSTANDING LOANS, PARENT COMPANY, POLITICAL ECONOMY, POSSESSIONS, POVERTY ALLEVIATION, PURCHASES, RAPID GROWTH, RATES OF RETURN, REGRESSION ANALYSIS, REGULATORY FRAMEWORKS, RESEARCH ASSISTANCE, RURAL BANKS, SALES, SAVINGS, SAVINGS ACCOUNT, SAVINGS ACCOUNTS, SELF-EMPLOYMENT, SMALL BUSINESSES, SOCIAL BANKING, SOCIETY, START-UP, STATE BANKS, TOP MANAGEMENT, TRADITIONAL BANKING, UNEMPLOYED, UNEMPLOYMENT, UNEMPLOYMENT STATISTICS, UNION, UNPAID WORKERS, VILLAGE, WAGE, WORKING AGE,
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090630083925
https://hdl.handle.net/10986/4173
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