Paper

Mexico Country-Level Savings Assessment

Possible strategies to improve the quality and quantity of deposit services available to poor and low-income households in Mexico
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This report, by CGAP, examines the client-demand for small-balance deposit services in Mexico and the ability of the financial system to satisfy this demand at three levels: financial institutions (micro), supporting infrastructure (meso), and policy (macro). The report finds that:

  • Only 6% of the rural and 15% - 25% of the urban population have access to accounts in financial institutions;
  • Savings in banks account for just 9.7% of the gross domestic product;
  • There is:
    • Strong latent demand for small deposit services,
    • Need for a more inclusive financial system,
    • Lack of strategic interest in savings mobilization;
  • Lack of financial literacy and lack of confidence in the financial sector stop low-income people from saving in formal financial institutions.

The report lists the constraints at various levels:

  • At the micro-level:
    • Lack of physical proximity, inappropriate, high-cost products, ineffective marketing and product delivery.
  • At the meso-level:
    • Lack of competitive second-tier services for the popular finance sector,
    • Distortion of the market by heavy government influence.
  • At the macro-level:
    • Fragmented public policy,
    • Poorly executed subsidy programs.

The report recommends the following strategies to improve small-deposit mobilization in Mexico:

  • Improve financial literacy of the consumers;
  • Build institutional and human capacity among financial institutions;
  • Enhance innovation in product design, marketing and service delivery;
  • Support viable financial infrastructure services for the popular finance sector;
  • Press for policy coherence at the political level.

About this Publication

By Klaehn, J., Helms, B.,, Deshpande, G.
Published