Financial inclusion and inflation

Abstract

This paper uses a VAR model to elicit the relationship between financial inclusion variables, inflation and GDP growth rate in Mexico for the period 2002 - 2018. The results for this period show that there is weak evidence that the variables of financial inclusion have an effect on inflation and GDP growth rate. There are two key results in this document that confirm this statement. First, the statistical significance between inflation and the number of debit cards and the number of ATMs per 1, 000 km2 is 10 %. Second, the statistical significance between GDP growth rate and the number of ATMs and Point of Sales Terminals (POS) per 1, 000 km2 is 10%. This study also shows that some financial inclusion variables are correlated with better forecasts of inflation and economic growth.