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Does household financial access facilitate law compliance? Evidence from Mexico

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  • Gutiérrez, Emilio
  • Teshima, Kensuke

Abstract

We investigate the impact of financial access on law compliance (whether workers are registered in a mandated social security system). In contrast to previous studies that focus on firms’ access to credit, we investigate workers’ access to credit. Exploiting the geographic variation in financial access due to Banco Azteca’s opening in Mexico in 2002 that changed financial access by poor people almost over-night, we find that financial access increased the probability of getting formalized.

Suggested Citation

  • Gutiérrez, Emilio & Teshima, Kensuke, 2016. "Does household financial access facilitate law compliance? Evidence from Mexico," Economics Letters, Elsevier, vol. 149(C), pages 120-124.
    • Handle: RePEc:eee:ecolet:v:149:y:2016:i:c:p:120-124
    DOI: 10.1016/j.econlet.2016.10.025
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    References listed on IDEAS

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    1. Simon Johnson & John McMillan & Christopher Woodruff, 2002. "Property Rights and Finance," American Economic Review, American Economic Association, vol. 92(5), pages 1335-1356, December.
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    Cited by:

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    2. J. Birkenmaier & Q. Fu, 2019. "Does U.S. Household Financial Access Mediate the Relationship Between a Large Income Drop and Credit Record?," Journal of Consumer Policy, Springer, vol. 42(2), pages 267-283, June.
    3. Estevão, João & Lopes, José Dias & Penela, Daniela, 2022. "The importance of the business environment for the informal economy: Evidence from the Doing Business ranking," Technological Forecasting and Social Change, Elsevier, vol. 174(C).

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    More about this item

    Keywords

    Financial access; Law compliance; Informality;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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