Factors behind Financial Inclusion in Peru: Internal Forum on Financial Inclusion

This paper presents an analysis of the factors affecting the scope of financial inclusion in Peru.The paper examines the banking penetration and states that with respect to the GDP, it shows progress, exceeding the levels of late 1990s. It reviews literature to understand in welfare due to financial inclusion. The paper then performs an analysis using data on households and small and medium enterprises (SMEs) accessing financial services, and follows it up with case studies on mobile banking models. Findings include:

• Promoting financial inclusion for individuals and companies involves tackling market faults that make extensive use of financial services difficult;
• Estimates show that the potential for financial inclusion in households is focused on the middle class;
• Factors that reduce the probability of using banking services in households are being a woman, rural, family worker, low-income quintiles, and living in small towns;
• For SMEs, poorer quintiles lower the probability of using banking services, while education, company revenue, and being formal increase it;
• Perception of barriers to using banking services varies according to characteristics of the individual;
• Financial exclusion requires political action to combat market faults.