Financial Inclusion, Growth and Inequality: A Model Application to Colombia

Izabela Karpowicz

No 2014/166, IMF Working Papers from International Monetary Fund

Abstract: Financial inclusion has been one of the key pillars of Colombia’s development strategy for a number of years. Financial inclusion policies have aimed at channeling microcredit to poor, spreading formal banking system usage, fostering electronic payment acceptance, and making financial services more affordable. Using simulations from a general equilibrium model it is possible to identify the most binding financial sector frictions that preclude financial inclusion of enterprises, and study the effects on growth and inequality of efforts to remove these frictions. The study finds that lowering contraints on collateral promises higher growth while inequality is better tackled through measures that lower the financial participation cost.

Keywords: WP; firm; cost; leveraged firm; participation cost; intermediation cost; Financial deepening; financial inclusion; access to finance; inequality; excluded firm; firms leverage; medium-size company; Credit; Financial sector; Collateral; Global (search for similar items in EconPapers)
Pages: 31
Date: 2014-09-12
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Citations: View citations in EconPapers (17)

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