Financial Inclusion and Stability in Latin America : Empirical Evidence and Potential Synergies

Motivations for introducing the financial inclusion of households that is to have access to useful and affordable financial products and services that meet their needs for transactions, payments, savings, credit and insurance (World Bank, 2013) could range from a decline in the use of physical cash and growth of retail payment market to financial stability.The COVID-19 pandemic and evolving social dissent in Latin America countries, where most of all financially excluded people in region live (Brazil, Colombia, Chile, Peru), have heightened the interest in exploring a role of financial inclusion of households for both stability and growth. With the aim of testing financial inclusion metrics, before and after social protest, we explore recently protests in those jurisdictions. To provide relevant empirical evidence on the welfare effects of the financial access we also use number of factors contributing to social stability such as banking infrastructure, digital environment. Inter alia, in Colombia poverty is more dependent on physical financial inclusion, in Mexico and Peru consumption is coherent with physical financial inclusion. Despite differences among these jurisdictions and their financial inclusion strategies, key insights emerging from these experiences could be useful – e.g. synergy between physical and digital financial inclusion