Determinants and evolution of financial inclusion in Latin America: A demand side analysis

The benefits of financial inclusion could be particularly important in Latin America, where the levels of ownership and use of different instruments lag behind those of developed countries. An improvement in the ownership and use of formal financial instruments could result in a reduction in informality, the promotion of formal savings and productive credit, and, therefore, an inclusive economic growth. The objective of this paper is to analyze the financial inclusion of a group of Latin American countries in order to detect the most used financial instruments and the main socioeconomic determinants that explain their ownership or use. At the same time, the evolution of the main variables was also studied for the years 2011, 2014, 2017 and 2021. Micro-data from the Global Findex database was examined (except for 2021, in which only macro-data are available). Statistical models and multivariate econometrics are applied to understand the individual socioeconomic characteristics of people who are still very unlikely to own and use formal financial instruments. Finally, the main reasons for not having an account were analyzed in order to delve into the main restrictions on which the financial market must focus to achieve greater financial inclusion.