Financial Inclusion, Economic Development, and Inequality: Evidence from Brazil

Julia Fonseca and Adrien Matray

No 30057, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study a financial inclusion policy targeting Brazilian cities with low bank branch coverage using data on the universe of employees from 2000–2014. The policy leads to bank entry and to similar increases in both deposits and lending. It also fosters entrepreneurship, employment, and wage growth, especially for cities initially in banking deserts. These gains are not shared equally and instead increase with workers’ education, implying a substantial increase in wage inequality. The changes in inequality are concentrated in cities where the initial supply of skilled workers is low, indicating that talent scarcity can drive how financial development affects inequality.

JEL-codes: G2 H8 J2 J3 O1 O43 (search for similar items in EconPapers)
Date: 2022-05
New Economics Papers: this item is included in nep-ban, nep-isf, nep-lma and nep-ure
Note: CF DEV LS PR
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Citations: View citations in EconPapers (4)

Published as Julia Fonseca & Adrien Matray, 2024. "Financial inclusion, economic development, and inequality: Evidence from Brazil," Journal of Financial Economics, vol 156.

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