Bank Competition and Financial Inclusion: Evidence from Mexico

Rainer Schwabe discusses how competition affects local bank accounts in Mexico in this Review of Industrial Organization article.

The authors document a positive relation between bank competition and the presence of bank accounts at the local level in Mexico. Using a two-stage estimation approach based on an equilibrium structural model, they demonstrate that moving from a monopoly to a duopoly will lead to a 40 percent increase in bank accounts over the cross-market mean. Dr. Schwabe and his coauthor conclude that countries should prioritize policies that facilitate bank competition.

This article was originally published in the Review of Industrial Organization.

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