[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/bdm/wpaper/2013-14.html
   My bibliography  Save this paper

Bank Competition and Account Penetration: Evidence from Mexico

Author

Listed:
  • Marín Ana Georgina
  • Schwabe Rainer
Abstract
This paper documents a positive relation between bank competition and the penetration of bank accounts at the municipal level in Mexico. To account for potential biases in our regressions due to the endogeneity of market structure, we employ a two-stage estimation approach based on an equilibrium structural model. Our preferred estimate implies that moving from a monopoly to a duopoly will lead to an increase of 1,016 accounts per 10,000 adults, a 42% increase over the cross-municipality mean. This is comparable to the effect of large increases in per capita income and years of schooling, or the establishment of an additional branch by a bank who is already present in the local market. Our results suggest that competition policy should be given a prominent role in the financial inclusion agenda.

Suggested Citation

  • Marín Ana Georgina & Schwabe Rainer, 2013. "Bank Competition and Account Penetration: Evidence from Mexico," Working Papers 2013-14, Banco de México.
    • Handle: RePEc:bdm:wpaper:2013-14
    as

    Download full text from publisher

    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7BCE6A1B00-CC37-BC86-CDA2-9E200353296A%7D.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Inessa Love & María Soledad Martínez Pería, 2015. "How Bank Competition Affects Firms' Access to Finance," The World Bank Economic Review, World Bank, vol. 29(3), pages 413-448.
    2. Thorsten Beck & Asli Demirgüç-Kunt & Maria Soledad Martinez Peria, 2008. "Banking Services for Everyone? Barriers to Bank Access and Use around the World," The World Bank Economic Review, World Bank, vol. 22(3), pages 397-430, November.
    3. Claessens, Stijn, 2006. "Access to financial services: a review of the issues and public policy objectives," Journal of Financial Transformation, Capco Institute, vol. 17, pages 16-19.
    4. Pascaline Dupas & Sarah Green & Anthony Keats & Jonathan Robinson, 2014. "Challenges in Banking the Rural Poor: Evidence from Kenya's Western Province," NBER Chapters, in: African Successes, Volume III: Modernization and Development, pages 63-101, National Bureau of Economic Research, Inc.
    5. Berger, Allen N. & Miller, Nathan H. & Petersen, Mitchell A. & Rajan, Raghuram G. & Stein, Jeremy C., 2005. "Does function follow organizational form? Evidence from the lending practices of large and small banks," Journal of Financial Economics, Elsevier, vol. 76(2), pages 237-269, May.
    6. Gimet, Céline & Lagoarde-Segot, Thomas, 2012. "Financial sector development and access to finance. Does size say it all?," Emerging Markets Review, Elsevier, vol. 13(3), pages 316-337.
    7. Beck, Thorsten & Demirguc-Kunt, Asli & Martinez Peria, Maria Soledad, 2007. "Reaching out: Access to and use of banking services across countries," Journal of Financial Economics, Elsevier, vol. 85(1), pages 234-266, July.
    8. Mark D. Manuszak & Charles C. Moul, 2008. "Prices And Endogenous Market Structure In Office Supply Superstores," Journal of Industrial Economics, Wiley Blackwell, vol. 56(1), pages 94-112, March.
    9. Scott Fulford, 2010. "The effects of financial development in the short and long run," Boston College Working Papers in Economics 741, Boston College Department of Economics, revised 31 May 2011.
    10. Patrick Honohan, 2004. "Financial Sector Policy and the Poor : Selected Findings and Issues," World Bank Publications - Books, The World Bank Group, number 14874.
    11. Beck, Thorsten & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2004. "Bank Competition and Access to Finance: International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 627-648, June.
    12. Andrew M. Cohen & Michael J. Mazzeo, 2007. "Market Structure and Competition among Retail Depository Institutions," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 60-74, February.
    13. Caskey & John P. & Duran, Clemente Ruiz & Solo, Tova Maria, 2006. "The urban unbanked in Mexico and the United States," Policy Research Working Paper Series 3835, The World Bank.
    14. Demirgüç-Kunt, Asli & Córdova, Ernesto López & Pería, María Soledad Martínez & Woodruff, Christopher, 2011. "Remittances and banking sector breadth and depth: Evidence from Mexico," Journal of Development Economics, Elsevier, vol. 95(2), pages 229-241, July.
    15. Chong, Terence Tai-Leung & Lu, Liping & Ongena, Steven, 2013. "Does banking competition alleviate or worsen credit constraints faced by small- and medium-sized enterprises? Evidence from China," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3412-3424.
    16. World Bank, 2012. "Global Financial Development Report 2013 : Rethinking the Role of the State in Finance," World Bank Publications - Books, The World Bank Group, number 11848.
    17. Honohan, Patrick, 2008. "Cross-country variation in household access to financial services," Journal of Banking & Finance, Elsevier, vol. 32(11), pages 2493-2500, November.
    18. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    19. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934, Elsevier.
    20. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    21. Andrew Cohen & Michael Mazzeo, 2010. "Investment Strategies and Market Structure: An Empirical Analysis of Bank Branching Decisions," Journal of Financial Services Research, Springer;Western Finance Association, vol. 38(1), pages 1-21, August.
    22. Djankov, Simeon & Miranda, Pedro & Seira, Enrique & Sharma, Siddharth, 2008. "Who are the unbanked ?," Policy Research Working Paper Series 4647, The World Bank.
    23. Ardic, Oya Pinar & Heimann, Maximilien & Mylenko, Nataliya, 2011. "Access to financial services and the financial inclusion agenda around the world : a cross-country analysis with a new data set," Policy Research Working Paper Series 5537, The World Bank.
    24. Robin Burgess & Rohini Pande & Grace Wong, 2005. "Banking for the Poor: Evidence From India," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 268-278, 04/05.
    25. Robin Burgess & Rohini Pande, 2005. "Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment," American Economic Review, American Economic Association, vol. 95(3), pages 780-795, June.
    26. Kendall, Jake & Mylenko, Nataliya & Ponce, Alejandro, 2010. "Measuring financial access around the world," Policy Research Working Paper Series 5253, The World Bank.
    27. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009, Elsevier.
    28. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
    29. Michael J. Mazzeo, 2002. "Competitive Outcomes in Product-Differentiated Oligopoly," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 716-728, November.
    30. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
    31. World Bank, 2012. "World Development Report 2012 [Rapport sur le développement dans le monde 2012]," World Bank Publications - Books, The World Bank Group, number 4391.
    32. Barth, James R. & Lin, Chen & Lin, Ping & Song, Frank M., 2009. "Corruption in bank lending to firms: Cross-country micro evidence on the beneficial role of competition and information sharing," Journal of Financial Economics, Elsevier, vol. 91(3), pages 361-388, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eduardo A. Cavallo & Tomás Serebrisky & Verónica Frisancho & Jonathan Karver & Andrew Powell & Diego Margot & Ancor Suárez-Alemán & Eduardo Fernández-Arias & Matías Marzani & Solange Berstein & Marian, 2016. "Saving for Development: How Latin America and the Caribbean Can Save More and Better," IDB Publications (Books), Inter-American Development Bank, number 94597 edited by Eduardo A. Cavallo & Tomás Serebrisky, February.
    2. Cavallo, Eduardo A. & Serebrisky, Tomás & Frisancho, Verónica & Karver, Jonathan & Powell, Andrew & Margot, Diego & Suárez-Alemán, Ancor & Fernández-Arias, Eduardo & Marzani, Matías & Berstein, Solang, 2016. "Saving for Development: How Latin America and the Caribbean Can Save More and Better," IDB Publications (Books), Inter-American Development Bank, number 7677, November.
    3. Folorunsho M. Ajide, 2019. "Remittances, Bank Concentration and Credit Availability in Nigeria," Journal of Development Policy and Practice, , vol. 4(1), pages 66-88, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ana Georgina Marín & Rainer Schwabe, 2019. "Bank Competition and Financial Inclusion: Evidence from Mexico," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(2), pages 257-285, September.
    2. Ghosh, Saibal, 2016. "Does mobile telephony spur growth? Evidence from Indian states," Telecommunications Policy, Elsevier, vol. 40(10), pages 1020-1031.
    3. Ardic, Oya Pinar & Heimann, Maximilien & Mylenko, Nataliya, 2011. "Access to financial services and the financial inclusion agenda around the world : a cross-country analysis with a new data set," Policy Research Working Paper Series 5537, The World Bank.
    4. Ahamed, M. Mostak & Mallick, Sushanta K., 2019. "Is financial inclusion good for bank stability? International evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 403-427.
    5. Bose, Sudipta & Saha, Amitav & Khan, Habib Zaman & Islam, Shajul, 2017. "Non-financial disclosure and market-based firm performance: The initiation of financial inclusion," Journal of Contemporary Accounting and Economics, Elsevier, vol. 13(3), pages 263-281.
    6. Franklin Allen & Elena Carletti & Robert Cull & Jun QJ Qian & Lemma Senbet & Patricio Valenzuela, 2021. "Improving Access to Banking: Evidence from Kenya [A matter of experience? Understanding the decline in group lending]," Review of Finance, European Finance Association, vol. 25(2), pages 403-447.
    7. Allen, Franklin & Demirguc-Kunt, Asli & Klapper, Leora & Martinez Peria, Maria Soledad, 2016. "The foundations of financial inclusion: Understanding ownership and use of formal accounts," Journal of Financial Intermediation, Elsevier, vol. 27(C), pages 1-30.
    8. Ghosh, Saibal, 2009. "Does Financial Outreach Engender Economic Growth? Evidence from Indian States," MPRA Paper 32072, University Library of Munich, Germany.
    9. Asplund, Marcus & Sandin, Rickard, 1999. "Competition in interrelated markets: An empirical study," International Journal of Industrial Organization, Elsevier, vol. 17(3), pages 353-369, April.
    10. Iddrisu, Abdul Malik & Danquah, Michael, 2024. "The financial inclusion agenda: Examining the role of conventional banks in deepening access to formal credit," Economic Systems, Elsevier, vol. 48(2).
    11. Vishal Singh & Ting Zhu, 2008. "Pricing and Market Concentration in Oligopoly Markets," Marketing Science, INFORMS, vol. 27(6), pages 1020-1035, 11-12.
    12. Feghali, Khalil & Mora, Nada & Nassif, Pamela, 2021. "Financial inclusion, bank market structure, and financial stability: International evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 236-257.
    13. Iqbal, Kazi & Roy, Paritosh K. & Alam, Shamsul, 2020. "The impact of banking services on poverty: Evidence from sub-district level for Bangladesh," Journal of Asian Economics, Elsevier, vol. 66(C).
    14. Annabel Vanroose & Bert D’Espallier, 2009. "Microfinance and Financial Sector Development," Working Papers CEB 09-040.RS, ULB -- Universite Libre de Bruxelles.
    15. Josephine Ofosu‐Mensah Ababio & Edward Attah‐Botchwey & Eric Osei‐Assibey & Charles Barnor, 2021. "Financial inclusion and human development in frontier countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 42-59, January.
    16. Pasali, Selahattin Selsah, 2013. "Where is the cheese ? synthesizing a giant literature on causes and consequences of financial sector development," Policy Research Working Paper Series 6655, The World Bank.
    17. Florian Leon, 2015. "What do we know about the role of bank competition in Africa?," CERDI Working papers halshs-01164864, HAL.
    18. Folorunsho M. Ajide, 2019. "Remittances, Bank Concentration and Credit Availability in Nigeria," Journal of Development Policy and Practice, , vol. 4(1), pages 66-88, January.
    19. Stijn Claessens & Erik Feijen, 2006. "Financial Sector Development and the Millennium Development Goals," World Bank Publications - Books, The World Bank Group, number 7145.
    20. Owens, Mark F. & Rennhoff, Adam D., 2014. "Provision and price of child care services: For-profits and nonprofits," Journal of Urban Economics, Elsevier, vol. 84(C), pages 40-51.

    More about this item

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdm:wpaper:2013-14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Subgerencia de desarrollo de sistemas (email available below). General contact details of provider: https://edirc.repec.org/data/bangvmx.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.