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Bank Account Ownership by Microentrepreneurs in Mexico

Carolina Rodriguez Zamora ()

Chapter 13 in Financial Decisions of Households and Financial Inclusion: Evidence for Latin America and the Caribbean, 2018, pp 429-461 from Centro de Estudios Monetarios Latinoamericanos, CEMLA

Abstract: This paper evaluates the impact of a value-added tax (VAT) rate increase on bank account ownership by Mexican microentrepreneurs considering informality as the main channel of this effect. Using two rounds of a cross-section survey aimed at understanding financial inclusion in Mexico and a difference-in-difference strategy, results indicate that an increase in the VAT rate negatively affects the probability of microentrepreneurs having a bank account in northern municipalities where the tax rate increased from 11% to 16%. In particular, financial inclusion of microentrepreneurs at the northern border decreased to a statistically significant effect, whereas financial inclusion of formal and informal salaried workers at the northern border did not change, as their fiscal obligations remained the same with the VAT amendment.

Keywords: informal economy; tax legislation; microentrepreneurs; financial inclusion. (search for similar items in EconPapers)
JEL-codes: E26 K34 L26 (search for similar items in EconPapers)
Date: 2018
ISBN: 978-607-8582-00-6 (online)
Note: Joint Research Program of the Central Bank Researchers Network
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