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

Author/Editor:

Izabela Karpowicz

Publication Date:

September 12, 2014

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 14/166

Subject:

English

Publication Date:

September 12, 2014

ISBN/ISSN:

9781498344838/1018-5941

Stock No:

WPIEA2014166

Format:

Paper

Pages:

31

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