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Bancarization and Violence in Colombia

Author

Listed:
  • John D. Castro-Pantoja
  • Jose Eduardo Gomez-Gonzalez

    (Banco de la República de Colombia)

  • Tatiana A. Mora-Arbelaez

    (Banco de la República de Colombia)

  • Daniela Rodriguez-Novoa
  • Laura C. Diaz-Barreto

Abstract

Income shocks affect violence through the opportunity cost and rapacity effects. Existing studies focus on the impact of transitory shocks, especially commodity price innovations. This paper builds on this literature and studies the causal effect of permanent income shocks on armed conflict in Colombia. Using a rich dataset reporting all guerrilla and other armed groups' attacks by municipality between 2009 and 2014 and information on the provision of banking services, it shows that increasing bancarization leads to reductions in violence. These results have important implications for public policy in countries with a long history of violence. They suggest that promoting financial inclusion is useful for reducing conflict. **** RESUMEN: Los choques de ingreso afectan la violencia a través de los efectos de rapacidad y costo de oportunidad. Los estudios existentes se enfocan en el impacto de choques transitorios, especialmente innovacionesen los precios de los bienes básicos. Este documento se basa en esa literatura y estudia el efecto causal de choques de ingreso permanentes sobre el conflicto armado en Colombia. Usando una base de datos que reporta todos los ataques de la guerrilla y otros grupos armados por municipio entre 2009 y 2014, al igual que información sobre la provisión de servicios bancarios, muestra que aumentos en la bancarización llevan a reducciones en la violencia. Estos resultados tienen implicaciones importantes para la política pública en países con una larga historia de violencia. Sugieren que aumentos en la inclusión financiera sirven para reducir el conflicto.

Suggested Citation

  • John D. Castro-Pantoja & Jose Eduardo Gomez-Gonzalez & Tatiana A. Mora-Arbelaez & Daniela Rodriguez-Novoa & Laura C. Diaz-Barreto, 2018. "Bancarization and Violence in Colombia," Borradores de Economia 1052, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:1052
    DOI: 10.32468/be.1052
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    File URL: https://doi.org/10.32468/be.1052
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    References listed on IDEAS

    as
    1. Gine,Xavier & Garcia,Nidia & Gomez-Gonzalez,Jose & Gine,Xavier & Garcia,Nidia & Gomez-Gonzalez,Jose, 2017. "Financial information in Colombia," Policy Research Working Paper Series 7998, The World Bank.
    2. Papke, Leslie E. & Wooldridge, Jeffrey M., 2008. "Panel data methods for fractional response variables with an application to test pass rates," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 121-133, July.
    3. Markus Bruckner & Antonio Ciccone, 2010. "International Commodities Prices, Growth and the Outbreak of Civil War in Sub-Saharan Africa," Working Papers 1008, BBVA Bank, Economic Research Department.
    4. José E. Gómez-Gonzalez & Nicholas M. Kiefer, 2009. "Bank Failure: Evidence From The Colombian Financial Crisis," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 3(2), pages 15-31.
    5. Oeindrila Dube & Juan F. Vargas, 2013. "Commodity Price Shocks and Civil Conflict: Evidence from Colombia," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1384-1421.
    6. Samuel Bazzi & Christopher Blattman, 2014. "Economic Shocks and Conflict: Evidence from Commodity Prices," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(4), pages 1-38, October.
    7. Markus Brückner & Antonio Ciccone, 2010. "International Commodity Prices, Growth and the Outbreak of Civil War in Sub-Saharan Africa," Economic Journal, Royal Economic Society, vol. 120(544), pages 519-534, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Violent attacks; Bancarization; Instrumental variables; Negative Binomial regression; Ataques violentos; Bancarización; Variables instrumentales; Regresión binomial negativa.;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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