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The Real Impact of Improved Access to Finance: Evidence from Mexico
Author(s) -
BRUHN MIRIAM,
LOVE INESSA
Publication year - 2014
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/jofi.12091
Subject(s) - poverty , exploit , natural experiment , access to finance , market access , business , low income , economics , finance , labour economics , demographic economics , economic growth , geography , agriculture , computer security , statistics , mathematics , archaeology , computer science
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 preexisting 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 preexisting bank penetration.