Title Identifying constraints to financial inclusion and their impact on GDP and inequality : a structural framework for policy / prepared by Era Dabla-Norris [and others]

Published [Washington, D.C.] : International Monetary Fund, ©2015

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Description 1 online resource (49 pages) : color illustrations Series IMF working paper, 1018-5941 ; WP/15/22 IMF working paper ; WP/15/22. Contents Cover; Contents; 1. Introduction; 2. Literature Review; 3. The Model; 3.1 Individuals; 3.1.1 Savings Regime; 3.1.2 Credit Regime; 3.1.3 Occupational Choice; FIGURES; 1. Lending Interest Rate, Monitoring Frequency, Cost of Capital, and Leverage Ratio; 2. The Occupation Choice Map in the Two Regimes; 3.2 Competitive Equilibrium; 4. Data and Calibration; TABLES; 1. Overview of the Data; 2. Data, Model and Calibrated Parameters; 5. Evaluation of Policy Options; 5.1 Reducing the Participation Cost; 5.2 Relaxing Collateral Constraints 3. Comparative Statics: Credit Participation Cost-Low-Income Countries4. Comparative Statics: Credit Participation Cost-Emerging Market Countries; 5.3 Increasing Intermediation Efficiency; 5. Comparative Statics: Collateral Constraint-Low-Income Countries; 6. Comparative Statics: Collateral Constraint-Emerging Market Countries; 5.4 Interactions Among Three Financial Parameters; 7. Comparative Statics: Intermediation Cost-Low-Income Countries; 8. Comparative Statics: Intermediation Cost-Emerging Market Countries 9. The Increase in Relative GDP per Capita When the Borrowing Constraint is Relaxed by 20% for Different Financial Participation Costs and Intermediation Costs5.5 Impact on GDP and Inequality: A Numerical Comparison; 5.6 Welfare Analysis; 3. The Impact of Financial Deepening of Various Forms of GDP per Capita, TFP and Income Inequality; 4. The Impact of Financial Deepening of Various Forms of GDP per Capita, TFP and Income Inequality; 10. The Impact of Financial Deepening on Welfare Redistribution; 6. Conclusion; REFERENCE Summary We develop a micro-founded general equilibrium model with heterogeneous agents to identify pertinent constraints to financial inclusion. We evaluate quantitatively the policy impacts of relaxing each of these constraints separately, and in combination, on GDP and inequality. We focus on three dimensions of financial inclusion: access (determined by the size of participation costs), depth (determined by the size of collateral constraints resulting from limited commitment), and intermediation efficiency (determined by the size of interest rate spreads and default possibilities due to costly monitoring). We take the model to a firm-level data from the World Bank Enterprise Survey for six countries at varying degrees of economic development---three low-income countries (Uganda, Kenya, Mozambique), and three emerging market countries (Malaysia, the Philippines, and Egypt). The results suggest that alleviating different financial frictions have a differential impact across countries, with country-specific characteristics playing a central role in determining the linkages and tradeoffs between inclusion, GDP, inequality, and the distribution of gains and losses. --Abstract Notes Authors: Era Dabla-Norris, Yan Ji, Robert Townsend, and D. Filiz Unsal "January 2015." "Strategy, Policy, and Review Department." Bibliography Includes bibliographical references (pages 44-49) Notes Online resource; title from pdf title page (IMF.org Web site, viewed January 29, 2015) Subject Financial services industry -- Developing countries -- Econometric models Income distribution -- Developing countries -- Econometric models Gross domestic product -- Developing countries -- Econometric models Computable general equilibrium models. Computable general equilibrium models Economic policy -- Econometric models Financial services industry -- Econometric models Gross domestic product -- Econometric models Income distribution -- Econometric models SUBJECT Developing countries -- Economic policy -- Econometric models Subject Developing countries Form Electronic book Author Dabla-Norris, Era. International Monetary Fund. Strategy, Policy, and Review Department. ISBN 1498381596 9781498381598 9781475585919 1475585918 9781484352878 1484352874

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