The Real Impact of Improved Access to Finance: Evidence from Mexico
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- Author(s): MIRIAM BRUHN, INESSA LOVE
- Published: Aug 12, 2013
- DOI: 10.1111/jofi.12091
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.
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