Financial inclusion and its impact on payment, savings, and credit

Abstract

Access to financial services can affect various aspects of household financial behavior, such as payment methods, savings, and access to credit. Identifying effective policy tools and understanding which population segments benefit most from financial inclusion remain open questions. Uruguay's Financial Inclusion Program introduced VAT rebates, POS subsidies, and required wages to be paid through bank accounts. We assess the impact of the wage-banking channel. Our findings suggest that, while bank account provision increased debit card ownership, it had a limited effect on the likelihood of using cards, driven mainly by those who already held them before the reform. This indicates that the observed rise in debit card transactions was likely due to fiscal incentives. We also find no significant impact on access to short-term credit or savings behavior.