Expanding access to finance to boost growth and reduce inequalities in Mexico
The access to formal financial services in Mexico is particularly low. Access is also
significantly unequal across income levels, gender, between rural and urban areas
and across regions. SMEs access to bank credit is low, hampering firms’ ability to
grow and innovate. The use of cash and informal credit is still widespread, especially
in rural areas, where financial infrastructure is underdeveloped. The diffusion of
digital financial services is slowly advancing but remains low, hindered by a relatively
low level of financial literacy and a digital divide. Expanding access to finance
would enable Mexican households to invest in education and health, and better manage
income shocks and smooth consumption. It would also enable Mexican firms to invest
more, increase productivity and create formal jobs. Low-income households, small firms
and more disadvantaged regions would particularly benefit, as it would unlock new
economic opportunities for them. Boosting competition in the banking sector would
facilitate SMEs access to credit by lowering interest rate margins. Upgrading the
regulatory framework of the financial system would help increase competition and quality
of financial services. The potential of the fintech sector is yet to be materialised,
which would further increase competition and bring financial services to wider segments
of the population. Strengthening financial education and digital literacy would facilitate
a larger and better use of traditional and digital financial services.
Published on June 03, 2022
In series:OECD Economics Department Working Papersview more titles