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

Izabela Karpowicz ()
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Izabela Karpowicz: International Monetary Fund, USA

Journal of Banking and Financial Economics, 2016, vol. 2, issue 6, 68-89

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: Financial deepening; financial inclusion; access to finance; inequality. (search for similar items in EconPapers)
JEL-codes: G2 G21 G28 O16 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (14)

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