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Impacts of financial inclusion on micro-businesses: Factors explaining business growth

Author

Listed:
  • David Rodríguez-González
  • Andrés García-Suaza

    (Universidad del Rosario)

  • Alexander Sarango-Iturralde
  • Juan Diego Mayorga

    (Universidad del Rosario)

  • Álvaro Pretel-Meneses

    (Rutgers University)

  • Soraya Husain-Talero
  • Lina Zarama
  • Juan Camilo Urbano
  • Daniel Girón
  • Natalia Medina
  • Aura Barberán

Abstract

Access to financial markets, digitization, and formality have been identified as key factors associat-ed with firm performance. This paper presents a detailed descriptive analysis of the income gap among a group of micro-businesses (MBs) in Colombia’s Pacific region, examining how various factors relate to this gap. Using data from MBs participating in a program by Foundation WWB Colombia and applying the Oaxaca-Blinder decomposition, the analysis shows that formal MBs owned by men—with stronger financial inclusion and digital skills—tend to generate higher income than their counterparts. Complementary qualitative field-work reveals that micro-entrepreneurs often perceive informal credit as more attractive than bank credit due to its easier access and greater payment flexibil-ity. These findings suggest that policies promoting women’s empowerment, formalization, digital literacy, and access to financial services may contribute to nar-rowing these income gaps among MBs in Colombian’s Pacific Region.

Suggested Citation

  • David Rodríguez-González & Andrés García-Suaza & Alexander Sarango-Iturralde & Juan Diego Mayorga & Álvaro Pretel-Meneses & Soraya Husain-Talero & Lina Zarama & Juan Camilo Urbano & Daniel Girón & Nat, 2025. "Impacts of financial inclusion on micro-businesses: Factors explaining business growth," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 100(3), pages 55-77.
    • Handle: RePEc:col:000090:021491
    DOI: 10.13043/DYS.100.3
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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