Financial Decisions of Households and Financial Inclusion: Evidence for Latin America and the Caribbean

Over the last few decades the interest in understanding household financial decision making has been growing. This interest has partly been due to its close relation with two phenomena of particular importance to developing economies: financial inclusion and financial literacy. A set of recent macroeconomic studies have shown how financial inclusion is positively related to financial stability, economic growth, equality and poverty reduction. As a consequence, many emerging countries, including those of Latin America, has created national financial inclusion strategies. As a first step towards designing such strategies, different surveys have been conducted that attempt to collect information on the access and usage of formal and informal financial products and services. The evidence demonstrates how people use informal saving, credit and payment instruments and that levels of financial inclusion among the population are very low. Moreover, the data shows that even people who participate in the formal financial sector use informal financial instruments. CAF-Development Bank of Latin America and several central banks of the region have actively participated in elaborating and compiling financial inclusion databases.