Financial exclusion and financial literacy: evidence from Mexico

Abstract

This study seeks to contribute to the understanding of the underlying factors that can explain the high levels of financial exclusion that persist in Mexico, with focus on the role of financial literacy. Our analysis is based on the 2018 National Survey of Financial Inclusion in Mexico (ENIF). To address the potential endogeneity between financial inclusion and financial literacy we use an instrumental variable probit model. The findings reveal that low levels of financial literacy, socioeconomic vulnerabilities, personality traits, and lack of trust in financial institutions hamper financial inclusion in Mexico.