"Financial Inclusion Index: Proposal Of A Multidimensional Measure For Mexico "

Abstract

The main purpose of this paper is introducing an index that allows for a general overview of Mexico’s municipalities in terms of financial inclusion. The index is calculated using principal component analysis on variables related to the measurement of the levels of access and usage of financial services, financial education, consumer protection and social development. Subsequently, all municipalities are ranked by an estimated degree of inclusion performing hierarchical cluster analysis. Results show that 36% of Mexico’s municipalities possess a high level of financial inclusion while 29% the lowest. Municipalities with higher income and better education benefit from the services that financial institutions offer, yet millions are still excluded from the financial system.