| Abstract: |
This paper constructs an index of regulatory quality for improving financial
inclusion for the purpose of assessing and comparing the quality of rules and
regulations in a sample of eight Latin American countries. The index comprises
11 regulatory practices classified into three categories: those that determine
the overall quality of the financial environment where providers of financial
services that meet the needs of the poor operate (the enablers); those that
deal with specific types of market frictions and regulate the provision of
specific financial products and services (the promoters) to large segments of
the population; and those that, albeit unintentionally, create distortions and
barriers that adversely affect financial inclusion (the preventers). An
important novelty of the index is that the assessment of individual regulatory
practices not only takes into account accepted standards, but also recognizes
that there are important interactions between regulations for financial
inclusion as well as between these regulations and other type of government
interventions. Among the countries in the sample, by mid-2017, Peru ranked
first in this index, followed closely by Mexico. Chile, Colombia, Paraguay,
and Uruguay obtained lukewarm results, although there were wide differences
among these countries’ individual results. Argentina and Brazil were the two
countries with the lowest overall scores. An additional contribution of the
paper is that, throughout the analysis, countries’ specific areas of strengths
and weakness in financial regulatory practices for improving financial
inclusion are identified. |