The World Bank has released its latest Finance and PSD Impact Newsletter. The paper looks at the impact of large-scale bank expansion in Mexico, evaluating the effects of increased access to finance for low-income borrowers.
The authors analyze the expansion of Banco Aztecta in 2002. The bank opened over 800 new branches inside the consumer goods retail stores of its parent company, Grupo Elektra. These new outlets catered primarily to low and middle income clients. The authors find a clear correlation between the bank's expansion and income growth among lower income groups.
The key findings to the report include:
- Bank openings increased the proportion of working age adults who own informal business by 7.6 percent
- The opening led to a higher proportion of women working as wage-earners
- As a result of the expansion, female incomes increased by 9 percent and male incomes rose by 5 percent
The authors also note what the bank openings did not achieve: no effects on the establishment of formal businesses, and no increases in female-owned informal businesses.
Men benefit from greater financial access by starting more informal businesses; women seem to find more work, and earn higher wages. With respect to women, it would be interesting to know if these findings are the result of women borrowing less, or because they are using their borrowings to fund other (non-business) activities.