Financial Inclusion, Growth and Inequality

Download or read book Financial Inclusion, Growth and Inequality written by Ms.Izabela Karpowicz and published by International Monetary Fund. This book was released on 2014-09-12 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial inclusion has been one of the key pillars of Colombia’s development strategy for a number of years. Financial inclusion policies have aimed at channeling microcredit to poor, spreading formal banking system usage, fostering electronic payment acceptance, and making financial services more affordable. Using simulations from a general equilibrium model it is possible to identify the most binding financial sector frictions that preclude financial inclusion of enterprises, and study the effects on growth and inequality of efforts to remove these frictions. The study finds that lowering contraints on collateral promises higher growth while inequality is better tackled through measures that lower the financial participation cost.