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Determinants of Financial Deepening in Mexico: A Dynamic Panel Data Approach || Determinantes de la Profundad Financiera en México: Un Enfoque de Datos De Panel Dinámico

Author

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  • Téllez-León, Isela Elizabeth

    (Escuela Superior de Economía. Instituto Politécnico Nacional (México))

  • Venegas-Martínez, Francisco

    (Escuela Superior de Economía. Instituto Politécnico Nacional (México))

Abstract

This paper aims to study the determinants of financial deepening (FD) in Mexico. FD is measured as the fraction of total credit assigned to private sector as a proportion of GDP. The explanatory variables include: enforcing contracts (rule of law) and institutions; bank regulation; bank competition; formal labor; and financial literacy, among others. The data contains information of each State of the Mexican Republic. The model estimation is performed by using ordinary least squares (OLS), robust least square (RLS) with several weights functions (to deal with outliers), and a dynamic panel model (DPM) estimated with the generalized method of moments (GMM). The main findings are that: 1) the rule of law, 2) financial savings, and 3) financial education are the main determinants of financial deepening in Mexico. || Este trabajo tiene como objetivo estudiar los determinantes de la profundad financiera (PF) en México. La PF se mide como el crédito total asignado al sector privado como proporción del PIB. Las variables explicativas incluyen: cumplimiento de contratos (estado de derecho) e instituciones; regulación bancaria; competencia bancaria; trabajo formal; y educación financiera, entre otros. Los datos contienen información de cada Estado de la República Mexicana. La estimación del modelo se realiza mediante el uso de mínimos cuadrados (MCO), mínimos cuadrados robustos (MCO) con varias funciones de ponderación (para tratar con valores atípicos) y un modelo de panel dinámico (MDP) estimado con el método generalizado de momentos (MGM). Los principales hallazgos son que: 1) el estado de derecho, 2) el ahorro financiero, y 3) la educación financiera son los principales factores determinantes de la profundización financiera en México.

Suggested Citation

  • Téllez-León, Isela Elizabeth & Venegas-Martínez, Francisco, 2019. "Determinants of Financial Deepening in Mexico: A Dynamic Panel Data Approach || Determinantes de la Profundad Financiera en México: Un Enfoque de Datos De Panel Dinámico," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 27(1), pages 285-299, June.
    • Handle: RePEc:pab:rmcpee:v:27:y:2019:i:1:p:285-299
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    More about this item

    Keywords

    Financial deepening; factors affecting financial deepening; econometric modeling; Mexico; profundad financiera; factores que afecta la profundización financiera; modelación econométrica; México.;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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