Financial inclusion and social cohesion in Mexican municipalities

Abstract

The objective of this study is to prove the effect of financial inclusion on the level of social cohesion in Mexican municipalities. The methodology led to the elaboration of two financial inclusion indexes and the estimation of probit models, based on 2010 data. The results statistically prove the non-linear, bell-shaped relation between financial inclusion and social cohesion in Mexican municipalities, and allow to observe the existing gap between inclusion levels and those that would maximize the probability of reaching a high social cohesion at a municipal level. The main limitations of the investigation were the absence of a consolidated theory regarding the analyzed phenomenon, and the lack of information for some of the variables that were considered in the estimation. This study is the first one to elaborate on the relation between financial inclusion and social cohesion at a municipal level for any country, two variables that are present in the Mexican government's current plans. Financial inclusion also means social inclusion for the municipalities, so the consolidation of this strategy seems promising for the Mexican people.