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ORCID

Izabela Karpowicz 0000-0002-3971-7733

Keywords

Financial deepening; financial inclusion; access to finance; inequality

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.

Acknowledgments

I would like to thank Era Dabla-Norris, Valerie Cerra, Marina Tavares, and Filiz Unsal (all IMF) and Professor Robert Townsend, Stacy Carlson, and Yu Shi (all MIT) for their helpful suggestions and comments, and Yan Ji (MIT) for the calibration of the model to Colombia.

First Page

68

Last Page

89

Page Count

22

Received Date

University of Warsaw

Revised Date

13 January 2016

Accept Date

25 May 2016

Online Available Date

16 June 2016

DOI

10.7172/2353-6845.jbfe.2016.2.4

JEL Code

G2; G21; G28; O16

Publisher

16 June 2016

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