Rotterdam Brown Bag Seminars General Economics

Vadym Volosovych (Erasmus University Rotterdam)
Wednesday, December 14, 2016

This study focuses on the role of social capital and attitude towards globalization for financial development using household-level data from Mexico. We study the relationship between the use of financial products or, alternatively, expenses in financial markets by Mexican households and variables related to social capital, attitude towards globalization, household characteristics, and local economic marginality conditions using the data from the Mexican National Survey on Values (ENVUD) from 2010 and National Survey on Income and Expenditures (ENIGH) from the same year. We match the unique data from these surveys though a common identifier and “localize” the state-level variables by interacting them with the local living conditions. Using individual-level data and a series of logit and Tobit regressions, we find robust evidence on the role of social capital and attitude towards globalization for the use of various financial arrangements. However, the role of these factors differs depending on the sophistication of financial instrument and has the opposite effect for the preference toward formal or informal finance. The penetration of the banks into local financial market does not seem to affect financial decisions of the households.