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Access to Credit: Awareness and Use of Formal and Informal Credit Institutions

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  • Campero Alejandra
  • Kaiser Karen

Abstract

In this paper we study the determinants of use of formal and informal credit sources. Given that awareness is a necessary step towards use of credit, in order to control for the possible selection bias we decompose the decision to use credit as a two stage decision process in which first, households form their choice set by deciding which type of institutions they want to consider as possible lenders (awareness), and then choose among them (use). Additionally, we allow for correlation between being aware of a specific source of credit and using it. We find evidence that supports the hypothesis that the formal and informal credit markets in Mexico attend different segments of the population. However, our results also show that informal lending sources' characteristics are valued per-se by consumers in certain situations, such as emergencies.

Suggested Citation

  • Campero Alejandra & Kaiser Karen, 2013. "Access to Credit: Awareness and Use of Formal and Informal Credit Institutions," Working Papers 2013-07, Banco de México.
    • Handle: RePEc:bdm:wpaper:2013-07
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    Cited by:

    1. Ximena Pena & Carmen Hoyo & David Tuesta, 2014. "Determinantes de la inclusion financiera en Mexico a partir de la ENIF 2012," Working Papers 1414, BBVA Bank, Economic Research Department.
    2. Rajlakshmi Mallik, 2015. "Being Credit Rationed: Delay and Transaction Cost," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 17(02), pages 1-28.
    3. Simplice A. Asongu & Valentine B. Soumtang & Ofeh M. Edoh, 2021. "Financial determinants of informal financial development in Sub-Saharan Africa," Research Africa Network Working Papers 21/077, Research Africa Network (RAN).
    4. Michele Benvenuti & Luca Casolaro & Emanuele Ciani, 2022. "Informal loans, liquidity constraints and local credit supply: evidence from Italy," Review of Economics of the Household, Springer, vol. 20(4), pages 1429-1461, December.
    5. Ximena Pena & Carmen Hoyo & David Tuesta, 2014. "Determinants of financial inclusion in Mexico based on the 2012 National Financial Inclusion Survey (ENIF)," Working Papers 1415, BBVA Bank, Economic Research Department.
    6. Zibei Chen & Minchao Jin, 2017. "Financial Inclusion in China: Use of Credit," Journal of Family and Economic Issues, Springer, vol. 38(4), pages 528-540, December.
    7. Harold Vásquez & María del Mar Castaños, 2018. "Knowledge, Information, and Financial Decisions: Why Do People Choose to Finance from Informal Credit Markets?," Investigación Conjunta-Joint Research, in: María José Roa García & Diana Mejía (ed.), Financial Decisions of Households and Financial Inclusion: Evidence for Latin America and the Caribbean, edition 1, volume 1, chapter 9, pages 279-308, Centro de Estudios Monetarios Latinoamericanos, CEMLA.
    8. Ghosh, Saibal & Vinod, D., 2017. "What Constrains Financial Inclusion for Women? Evidence from Indian Micro data," World Development, Elsevier, vol. 92(C), pages 60-81.
    9. Carmen Hoyo & Ximena Pena & David Tuesta, 2013. "Factores de demanda que influyen en la Inclusion Financiera en Mexico. Analisis de las barreras a partir de la ENIF," Working Papers 1336, BBVA Bank, Economic Research Department.
    10. Juan Antonio González Sierra & Carla Carolina Pérez Hernández & Jessica Mendoza Moheno, 2023. "Inclusión financiera y complejidad económica en México," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 18(2), pages 1-25, Abril - J.
    11. Kanika Rana & Brinda Viswanathan, 2019. "Household Choice of Financial Borrowing and Its Source: Multinomial Probit Model with Selection," Working Papers 2019-181, Madras School of Economics,Chennai,India.
    12. Carmen Hoyo & Ximena Pena & David Tuesta, 2013. "Demand factors that influence financial inclusion in Mexico: analysis of the barriers based on the ENIF survey," Working Papers 1337, BBVA Bank, Economic Research Department.
    13. Michele Benvenuti & Luca Casolaro & Emanuele Ciani, 2017. "Informal loans, liquidity constraints and local credit supply: evidence from Italy," Temi di discussione (Economic working papers) 1099, Bank of Italy, Economic Research and International Relations Area.
    14. Cañón, Carlos & Cortés, Edgar & Guerrero, Rodolfo, 2022. "Bank competition and the price of credit: Evidence using Mexican loan-level data," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 56-74.
    15. Arturo GARCÃ A-SANTILLÃ N, & Jesica RAMOS-HERNÃ NDEZ, & Sara HERNÃ NDEZ-GONZÃ LEZ, & Patricia RIVERA-SANTIAGO, 2017. "Pawnshops: Are They Really A Solution For The Vulnerable Population?," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 6(1), pages 1-52, January.
    16. International Monetary Fund, 2015. "Mexico: Selected Issues," IMF Staff Country Reports 2015/314, International Monetary Fund.
    17. Kanittha Tambunlertchai, 2018. "Determinants And Barriers To Financial Inclusion In Myanmar: What Determines Access To Financial Services And What Hinders It?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(01), pages 9-26, March.

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    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • G2 - Financial Economics - - Financial Institutions and Services
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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