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FINANCIAL INCLUSION REPORT

December 2009

_________________________________________________

National Banking and Securities Commission

President

Guillermo Babatz Torres

Vice-president of Regulatory Policies

General Direction on Access to Financial Services

Carlos Serrano Herrera, Raúl Hernández Coss, Alejandro Vázquez Zavala, Luis Treviño Garza, Michelle

Audirac Kushida, Jonathan Pasten Jiménez, Ana Laura Medina Pérez

Creativity and Design

Natalia López Diaz, Noemí Tecanhuey Sánchez, Bernabé Zamora García

Insurgentes Sur 1971, Col. Guadalupe Inn Del. Álvaro Obregón; México, D.F. 01020

MEXICO [email protected]

mailto:[email protected]

5


President


Vice-president of Regulatory Policies

General Direction on Access to Financial Services

Carlos Serrano Herrera, Raúl Hernández Coss, Alejandro Vázquez Zavala, Luis

Treviño Garza, Michelle Audirac Kushida, Jonathan Pasten Jiménez,

Ana Laura Medina Pérez

Creativity and Design

Natalia López Diaz, Noemí Tecanhuey Sánchez, Bernabé Zamora García

Insurgentes Sur 1971, Col. Guadalupe Inn

Del. Álvaro Obregón; México, D.F. 01020

MEXICO

6

Alliance for Financial Inclusion

The Alliance for Financial Inclusion (AFI) is a global

network of central banks, banking supervisors and other

persons in charge of public policies in over 60

developing countries. AFI provides its members with

tools and funds to share, develop and implement their

own knowledge in relation to successful financial

inclusion strategies. Together, these countries total

over 70% of the worldwide population without access to

financial services. The National Banking and Securities

Commission is part of AFI’s Steering Committee.

The disclosure of this report is possible thanks to the

support of AFI.

(Alliance for Financial Inclusion).

AFI’s contact information

www.afi-global.org

16th Floor, Lake Rajada Office Complex

193/63 New Ratchadapisek Road, Klongtoey

Bangkok 10110, Thailand

http://www.afi-global.org/

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Contents

Presentation

Introduction

1. Conceptual framework for indicators

Components of the financial inclusion policies

Access to financial services and its measurement

Difference between access and use of financial services

Group of financial inclusion indicators

2. Macroeconomic indicators

Macroeconomic indicators from sources of financial funds of the economy

Macroeconomic indicators from uses of financial funds of the economy

3. Access indicators

Geographic indicators

Demographic indicators

Indicators by State

Municipal indicators

Economic growth and access to financial services

4. Usage indicators

Deposit taking indicators

Credit indicators

Indicators by State


Final remarks

Bibliography

Annex 1. Access indicators per Municipality

Annex 2. Usage indicators per Municipality

Annex 3. Historic indicators per State.

Annex 4. Statistics per State.

Annex 5. Statistics per Municipality

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Presentation

Even when there is no universal definition of financial inclusion, it is important to have

statistic information on its different elements, particularly access and use of financial

services. This information will allow us to understand the situation of the country in order

to foster better public policies. Likewise, with better information, the private sector may

develop goods and services to provide people. In the medium term, the gathering of

information may allow assess the society’s progress towards an inclusive financial system. This first report on financial inclusion presents indicators which will allow us to have

parameters to measure progress in the financial service promotion.

Further, the report is aimed to identify the opportunity areas existing due to the lack of

financial penetration at the country and the absence of financial services in consistency

with the population requirements. The macroeconomic indicators have been built with

information from Banco de México, while financial access and usage indicators – reaching

municipal levels - were formed with data from regulatory reports sent by banking

institutions to the CNBV - National Banking and Securities Commission. In the future,

additional information on the use of some financial products will be included and

complemented with the results of surveys to households and individuals.

With this first report on financial inclusion in Mexico, the National Banking and Securities

Commission seeks to contribute at the society’s efforts to have a more inclusive financial

system, with greater penetration and offering better services to all population segments,

maintaining the stability of Mexican financial system.


President


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Methodology Note

The information on this report about branches, automatic teller machines (ATM), and

financial products was obtained from regulatory reports provided by supervised institutions

to the CNBV, particularly on regulatory report 24 (R.24). The information on points of sale

terminals (POS) was obtained from the Bank of Mexico and does not contain municipal

data. For geographic information (municipalities) the data bases of the National Institute on

Statistics and Geography (INEGI) have been used. The population estimation for the year

2009 was obtained from the National Population Council (CONAPO).

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Introduction

The Mexican financial sector is characterized for having statistical information that is

regularly submitted. For instance, there are daily and monthly indexes to measure the

performance of stock exchange markets, the behavior of prices, the behavior of delinquent

accounts, figures on the interest-rate differentials, transaction data, reserve information,

etc. However, there is another kind of information that has not been developed yet for

statistical databases: the analysis on how financial systems may become inclusive and who

has access to which financial services. Recently, a lot of questions about financial inclusion are starting to be answered: Which

are the main regulatory obstacles and barriers for a total access? Are these barriers more

pernicious for access to households than to enterprises? Is it more relevant to increase

financial service quality for those enterprises and households that already have access than

or to provide basic financial services to those who have been totally excluded? For what

kind of products is it desirable to begin our financial inclusion efforts?

In the last years, the term “financial inclusion” has acquired more importance among the

persons in charge of public policies. Nevertheless, there is not a universally accepted

definition thereof. In spite of that, “financial inclusion” is always a topic in discussions

about the future financial regulation and it is recognized as an element of financial and

social-economic stability for it provides opportunities to the economically unprivileged1.

The concept of access to financial products and services is accepted as the first element of

financial inclusion in most proposed definitions. It is through the access to financial services

that households and enterprises may move their savings, obtain loans, manage risks and

benefit from payment systems. There is an increasingly international recognition of social

and private benefits of financial service access, and particularly of its impact in diminishing

poverty.

However, financial service access does not guarantee the use of such services. Individuals

and companies may voluntarily decide to be excluded from the possibility of using the

products and services offered by financial institutions.

1 Eswar Prasad. “The Future of Financial Regulation”, Brookings Global Economic Development, G-20 Summit.

42

Nevertheless, sometimes exclusion may be explained by the lack of knowledge on the

options in the market or by the high costs of such options2, in these cases, barriers limit the

development of individuals and foster inequality.

Gathering data to create indicators may help us to understand how individuals and

enterprises use the options of products and services in the market. Therefore, the use of

financial products and services is proposed as the second element of the financial inclusion

concept.

Purposes of the report

This report is the first statistical analysis prepared by the CNBV in order to develop the

indicators related to financial inclusion in Mexico. The development of indicators is aimed

to provide information to the participants of the Mexican financial system and to foster

transparency. Its conception derives from the premise that more information to financial

agents may foster the development of financial products and services.

By indicators we mean for the variables or specific measures which may need to be

followed up due to their importance for financial inclusion.

Developing access indicators may help to identify the barriers which limit the development

of an inclusive financial system and may help agents to be more aware of the possible

business opportunities available in benefit of the financial system’s users.

These indicators will be published every six months and will increase their contents as new

sources of information are developed to add new indicator categories. In this first report,

the series of indicators are presented in three categories:

1. Macroeconomic indicators,

2. Access indicators, and

3. Usage indicators.

2 High costs include interest rates and fees and the costs of the transactions, for example, the expense of moving in order

to access the service points.

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Sections of the report

Section 1 presents an initial proposal for defining financial inclusion and, is intended to be

used as a reference for the underlying indicators conceptual framework. Also, a theoretical

framework for financial inclusion indicators is presented and will gradually be developed as

information sources become available to cover financial service supply and demand. In this

first report, most indicators have been developed relying in the regulatory reports received

by the Commission.

Section 2 contains the macroeconomic indicators at an aggregate level for savings and

credit in the Mexican economy to be easily compared internationally. Finally, sections 3 and

4 of the report present the first indicators for financial service access and use in Mexico

nationwide, in the states and in the municipalities. These indicators have been developed

based on adult population, that is to say inhabitants aged over 15 years, according to

international standards.

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1. Conceptual Framework for

Indicators

This section describes the conceptual framework for developing the financial inclusion

indicators prepared by the CNBV.

Additionally, we expose the key components of public policy aimed to promote financial

inclusion, some challenges identified by academic literature on the measurement of access

to financial services and on the development of indicators. Finally, we describe the

differences between access and use of financial services and the classification of indicators

into groups.

Components of financial inclusion policies

Despite there is not an international consensus on a financial inclusion definition, there are

certain elements that are common across all different definition proposals. For example, all

of them mention that financial inclusion refers to the possibility of having access to a series

of financial products and services. Likewise, they establish that it is necessary to have

financial education and mechanisms for consumer protection. Finally, these definitions

support the minimum characteristics that financial services most have: (financial)

accessibility, quality, availability and sustainability. In some cases, financial inclusion is

defined as a comprehensive access to financial services where there are no price barriers

for the use of such services3. The following table summarizes some of the definitions and

proposes a work definition comprising the above mentioned characteristics.

3 World Bank. “Finance for All? Policies and Pitfalls in Expanding Access”, 2008, p. 2.

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Table 1.1 Establishing a range for the definition of financial inclusion

Recently, different initiatives have been trying to present a Financial Inclusion definition. Some of them are below. Definitions:

1) Financial Inclusion means having access to a group of financial products and services including credit, savings, insurances, payment systems and pensions, as well as financial education and consumer protection.

The products and services have to be of high-quality, affordable, sustainable and available within a physical proximity. The low-income economically active populations need to have somehow these services. A social impact must be generated on families; such impact should be economically sustainable for financial service suppliers so micro-financial services could have economies of scale and innovation.

2) Universal and continuous access of population to diverse, adequate and formal financial services, as well as the possibility of using them according to their needs to help in their development and welfare.

3) Financial inclusion refers to the access and use of a financial product and service portfolio reaching the bulk of the adult population with clear and concise information to satisfy the increasing demand under an adequate regulatory framework.

For the purposes of this report, and as long as a consensus is reached on the definition of financial inclusion, the CNBV adopts definition number 3.

The following diagram shows the important elements inserted by different analysts and

scholars when talking about financial inclusion. The main three components are gathered in

the core: the access and use of financial services linked by payment systems allowing the

concurrence of supply and demand. Surrounding these main components, there are:

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financial education/literacy, consumer protection and regulation as key elements to

guarantee that financial inclusion is adequately performed.

Each of these three components plays an essential role in financial inclusion since it is

necessary for the supply of financial products and services to reach the majority of

population with clear and concise information, mechanisms to protect consumer rights and

under an adequate regulatory framework that does not create barriers for the

development of new products aimed to increase the supply of financial services.

Graph 1.2 Financial Inclusion key components

Access to financial services and its measurement

The development of effective public policies worldwide to improve access to financing has

been limited by the difficulties in measuring it. Among the main methodological problems

to measure access there are, first the difference between access to financial services and

the current use of such services by individuals and companies. Second, the problem of

defining, in the case of individuals, whether access should be measured on the individual or

on households. Finally, knowing the dimensions for measuring access: by type of

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institution, by type of financial service or by type of product. Further, the level of access

should be determined for each dimension4.


Access to financial service means the existence of financial service provision channels

available to all different segments of population, to wit: branches, automatic teller

machines, point of sale terminals, correspondents, mobile and internet banking.

The use of financial services refers to the estimate of the population that is using some kind

of financial service (deposits, loans, insurances, transactions, pensions and investments)5,

that is actually reaching financial system access.

Table 1.3


Population

Non-users of formal

financial services

Formal financial

user

Voluntary exclusion

Involuntary exclusion

Not required

Not used due to cultural / religious

reasons

Insufficient income / high risk

Discrimination

Information contract

framework

Price / Product characteristics

Financial services Access

Financial services Non access

4 Michael S. Barr, Anjali Kumar y Robert E. Litan. “Building Inclusive Financial Systems: A framework for Financial Access”,

Brookings Institute Press, 2007, p. 10. 5 In different media, the words, “bank service accessibility” and “access” are indistinctively used, but we think that they

limit the outreach or potential of what relay is “financial inclusion”.

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Group of financial inclusion indicators

Considering the studies performed by scholars worldwide, and particularly from the World

Bank6, there are four groups of indicators:

1. Macroeconomic,

2. Access to financial services,

3. Use of financial services,

4. Barriers.

Table 1.4 summarizes the groups of indicators and the categories of each.

Table 1.4

Indicator conceptual map

Private CreditGDP

Total DepositsGDP

Average CreditGDP per capita

Average DepositGDP per capita

Macroeconomic Indicators

Access Indicators

Usage Indicators

Products Type Level

DepositsCredit Demographic (per 1,000 adults) National Insurance/Pensions Socio-economic level State Investments Rural & urban Municipality

Transactions Gender and Age

Variable Type Level

BranchesATMs Geographic (per 1,000 km2) NationalPOS Demographic (per 10,000 adults) StateBanking agents MunicipalityMobile Banking & Internet

Transaction Costs Distance DocumentationBarrier Indicators

In this first report, only the following indicators are presented. The remaining indicators

will be developed as more information is available and will be included in the next reports.

6 Michael S. Barr, et.al. “Building Inclusive Financial Systems: A framework for Financial Access”, Brookings Institute Press,

2007, p.13-18.

49

Macroeconomic indicators: Private loans / GDP, Total Deposits / GDP.

Access indicators: Branches, ATMs and Point of Sale Terminals by geographic and

demographic type. Branches and ATMs are presented in three different levels and Point of

Sale Terminals nationwide and at state level.

Usage indicators: Different fund raising products. From credit, only credit card. These are

demographic and at 3 levels: National, state and municipal.

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2. Macroeconomic Indicators

Financial markets gather savings supply with the consumption financing demand and

investment in households, enterprises and government.

Additionally, financial markets complete commercial transactions, evaluating and

diversifying risks.

Macroeconomic indicators provide a general view on financial inclusion in an economy

allowing for international comparisons. These indicators may be analyzed from the focus of

the sources and uses of financial funds in the economy7.

Two indicators derived from the analytic structure were used to assess the level of financial

inclusion from a macroeconomic point of view.

1. Financial System Savings for Residents (Financial Funds Source).

• From a particular case financial inclusion represents the source from financial

funds internally derived from the private sector of a country.

2. Private Sector Financing (Uses of Financial Funds).

• From the financial inclusion perspective, it is is the financial intermediation within

the private sector for households (consumption and housing) as well as

enterprises.

Both indicators are measured in terms of Gross Domestic Product at nominal prices to be

assessed in comparison with other economies in a given period of time.

Macroeconomic indicators from the sources of the economy’s financial funds

The analysis of financial statements on sectors for public, private and external sectors is a

useful reference framework to measure the flow of financial funds circulating in an

economy and allowing the analysis of financial inclusion growth potential in Mexico,

particularly for the private sector.

From the financial funds source point of view, the indicator that is mostly used to measure

financial inclusion levels is financial savings in private sector through the most

comprehensive monetary aggregate (M4) which are the total internal financial savings for

the private sector both for residents and non-residents in the country (Table 2.1).

7 Banco de México (Central Bank). “Financial System Report”, July 2009, pp. 49-54.

51

Table 2.1 Sources of the economy’s financial funds

Balances as GDP’s percentage

Total Sources

TotalNon -

ResidentsTotal

Public

Sector

Commerci

al Banks

Private

Sector

SAR2/ Other

2003 65.60 43.91 43.31 9.26 34.05 0.60 21.69 14.01 0.43 7.25

2004 62.70 43.13 42.04 9.34 32.69 1.09 19.57 13.01 0.49 6.07

2005 63.56 46.57 45.01 10.34 34.66 1.57 16.99 10.85 0.29 5.85

2006 63.62 48.11 46.38 10.43 35.94 1.73 15.51 8.79 0.29 6.43

2007 62.58 48.37 45.93 10.29 35.64 2.44 14.22 7.67 0.30 6.24

2008 72.50 55.18 52.33 12.71 39.62 2.85 17.32 9.16 0.18 7.98

In Residents Possesion1/

Monetary Aggregate - M4 External Financing3/

Source: Banco de México, Fuentes y usos de recursos financieros-saldos como porcentaje del PIB

1/ Retirement Saving Funds System, including Siefores and other Funds.

2/ Including external debt of the Federal Government, state-owned organizations and companies and external

PIDIREGAS, reported by

The Finance Ministry (Secretaria de Hacienda y Crédito Público - SHCP).

3/ Liabilities outside commercial banking. Excluding non-resident fund raising.

4/ Includes loans and securities issued abroad by the private sector.

Even if this focus allows valuating the flows between sectors for financial inclusion this

analysis defines a narrower measurement of financial savings, so savings in the financial

system held by residents of the country are reflected (Table 2.2). Thus, for the purpose of

analysis, the definition for savings in financial system held by residents in the country does

not consider bills and coins in possession of the public in general for they are liquid assets

that not necessarily represent savings in the economy, and neither considers assets held by

non-residents in the country, so net savings of the country’s residents are reflected.

In this way, the savings of the financial system held by residents of the country comprise

the following items from the monetary aggregates:

1. From the narrowest monetary aggregate -M1- checking accounts and current

account and sight deposits on Banks residing in the country and Savings and

Loan Companies (SAPs) are included. It is remarkable that bills and coins held by

public in general are not considered since they do not necessarily represent any

savings for the economy for they are totally liquid.

2. Additionally, the aggregated - M2 – is included which represents internal assets

held by residents, and considers internal fund raising from resident banks and

52

Savings and Loan Companies (SAP), as well as holdings of Public and Private

Securities where holdings on Investment Companies Specialized in Retirement

Funds (SIEFORES) are outstanding, together with Retirement Saving Funds

outside SIEFORES and which are divided into housing funds –(INFONAVIT and

FOVISSSTE), retirement funds deposited in Bank of Mexico (Concentration

account for IMSS and ISSSTE) and Pension Bonds of the ISSSTE which were

recently created due to the amendments to the Law of the ISSSTE8.

3. On the other hand, this definition does not include items comprised on monetary

aggregate –M3-, since they are assets held by Non-residents in the country.

4. Finally, the broadest monetary aggregate –M4- includes deposits held by residents

of the country in Agencies and Branches of national banks abroad.

8 Idem, p. 51. The recent increase in the share in the Retirement Savings System (SAR) is due to the impact of the

Amendment to the Law of the ISSSTE during the last quarter of 2008 which resulted in an increase in the holdings of financial assets of the private sector equivalent to 1.9 percentage points of the Gross Domestic Product. Bank of Mexico. “Reporte Sobre el Sistema Financiero”, 2008.

53

Table 2.2 Savings of the financial system held by residents in terms of Gross Domestic

Product as of June 2009

Monetary

Aggeregates

Components of Monetary Aggregates Internal Financial

Savings held by

Residents

GDP % as of

June 2009

Accrued %

of the GDP

M1 Narrow Monetary Aggregate 12.33%

* Bills and coins held by public in general Not included 4.09%

* Checking accounts in resident banks

(total coins) 6.16% 6.16%

* Current account deposits in resident banks

and savings and loan companies 2.08% 8.27%

M2 Internal financial assets held by residents 43.19%

* Internal fund raising in resident banks and

savings and loan companies 10.51% 18.78%

* Public securities held by residents1/ 22.84% 41.62%

* Private securities2/ 2.72% 44.34%

* Retirement Savings Funds outside

SIEFORES3/, 4/ 7.12% 51.46%

M3 Internal financial assets held by non Not included 2.61%

Residents

M4 Fund raising by Mexican banks’ branches and agencies

abroad

0.64%

* Fund raising by Mexican banks’ branches and

agencies abroad

0.39% 51.85%

* Fund raising by national banks’ branches and

agencies abroad, deposits from non-residents

Not included 0.25%

Internal Financial Savings held by Residents 51.85% 51.85%

Total Internal Savings of the financial System 55.94%

Source: Banco de México, information on monetary aggregates without including the public sector.

1/ Public Securities held by Residents include securities issued by the Federal Government, Bonds issued by the Bank of

Mexico (Brems) based on article 7 fraction VI of the Law of the Bank of Mexico in order to regulate liquidity on the money

market; IPAB Securities (Institute for the Protection of Banking Savings), including certificates issued by the securitization

of IPAB’s liabilities, and Other Public Securities, including Promissory Notes and Securities Certificate Indemnification

(PICS-FARAC and CBICS-FARAC), securities issued by companies and public agencies and by states and municipalities. This

includes securities held by Siefores and in possession of private and particular companies.

2/ Private Securities include mortgage obligations, unsecured obligations, negotiable instruments, share certificates,

medium and short term promissory notes and securities certificates issued by private resident entities. This includes

securities held by Siefores and in possession of private and particular companies.

3/ Investment companies specialized in Retirement Funds (SIEFORES). Classification of securities in the portfolio of

Siefores was made according to the figures of CONSAR and is compatible with the Monetary Aggregates methodology.

4/ Retirement Saving Funds outside SIEFORES include: Housing funds, retirement funds in the Bank of Mexico

corresponding to IMSS and ISSSTE and ISSSTE pension Bonds. According to the new Law of the ISSSTE, Afores keep the

record of the updated value of the ISSSTE Pension Bond on the workers' individual accounts.

54

Table 2.2 provides an example as of June 2009 of what these concepts represent in terms

of Gross Domestic Product, highlighting items of public values9 held by residents and the

group of Retirement Savings Funds. From the historical perspective, from the creation of

the Retirement Savings Fund System, there has been a positive evolution in these concepts

in terms of a higher financial soundness.

Savings may be analyzed as to the structure of the terms, assuming that for narrower

monetary aggregates, as M1 (without considering bills and coins held by the public) are

short term, more liquid savings and monetary aggregates are wider, and particularly those

of belonging to the Retirement Savings System for they are less liquid funds designed to be

used at the moment of the worker’s retirement in a long term. This last element, besides

making the financial market deeper, it also makes it stable and sound (Table 2.2).

The highest soundness of the financial system has been reflected for instance in the case of

public securities which have experienced a gradual increase in the average term of

placements, for they went from an average term in 1997 lower than one year (333 days) to

a term over six years (2,243 days in average)10 on June 2009, creating thus wider

investment horizons and promoting certainty and financial stability.

9 Public securities include M, Bondes, BREMS, BPAS, including Indemnification Securities Certtificates (CBICS-FARAC),

securities issued by companies and public agencies and by the states and municipalities.

10

Banco de México. Annual Report 2009 and statisitic data.

55

Graph 2.3 Financial Savings held by Residents

Figures as GDP’s percentage

0%

10%

20%

30%

40%

50%

60%

Jun

-97

Jun

-98

Jun

-99

Jun

-00

Jun

-01

Jun

-02

Jun

-03

Jun

-04

Jun

-05

Jun

-06

Jun

-07

Jun

-08

Jun

-09

National banks external deposits from residents (M4)Retirement Saving FundsM2 without Retirement Saving FundsM1 without bills and coinsTotal Internal Savings from Banks

Long term savings

Short term savings

M1

(without

B&C)

M2

RSF

In order to internationally compare this type of indicators, it is considered the monetary

aggregate M2, even if it is a little bit different from the savings indicator of the financial

system as held by residents, since it considers bills and coins held by the public and does

not considers fund raising by residents in agencies abroad, but this is not so different when

dividing it by the Gross Domestic Product, on the contrary, it is a more standard statistical

data which is more easily accessed internationally and allows relatively easy comparisons

with other economies.

Thus, the M2 statistics on 2007 GDP, before the global financial crisis, according to the

information gathered by the International Monetary Fund through International Financial

Statistics (IFS) reveal that even if savings in Mexico are relatively well placed in relation to

other countries, many developed economies and many emerging economies have better

levels of financial sa

vings in terms of their GDP, which means that from a macro-economic point of view Mexico

still has a potential for a higher level of savings (Graph 2.4).

56

Graph 2.4 M2 as percentage of the Gross Domestic Product 2007.

Figures in billions of USD

Argentina

Brazil

Chile

China

Colombia

India

Korea Rep

Russia

AustraliaCanada

Mexico

Southafrica

United

Kingdom

Venezuela

0

20

40

60

80

100

120

140

160

180

$0 $1,000 $2,000 $3,000 $4,000

GDP in billions USD

M2

/ G

DP

(%

)

Macroeconomic indicators from uses of the economy’s financial funds

As to the use of financial funds in the economy, the most used macroeconomic indicator is

the financing level as ratio of the Gross Domestic Product. Particularly, it is frequent to

assess financing to private sector. In this regard, consumption financing to households is

highlighted for diminishing income and expense flows and to housing for equity

investment, and also financing to companies.

Table 2.5 allows analyzing how financing is distributed among private, public and external

sectors. By analyzing financing within private sector, financing to enterprises is higher than

financing to households, even if a good ratio of the former comes from abroad in contrast

with financing to households. On the other hand, persistence of low financial through debt

issuance is remarkable as a challenge to be overcome.

57

Table 2.5 Uses of the economy’s financial funds

Balances as percentage of GDP

Total UsesInternational

Reserves

Other

Concepts

TotalFederal

Sector

States &

Municipal.

Total Consumption Housing TotalFinancial

Interm.

Credit

Debt

IssuanceExternal

2003 65.60 24.87 9.25 1.83 7.42 15.62 6.52 1.84 7.25 38.14 1.39 8.13 -6.92

2004 62.70 23.51 9.74 2.38 7.36 13.77 5.90 1.80 6.07 34.84 1.38 7.57 -4.61

2005 63.56 23.97 10.78 3.29 7.49 13.19 5.64 1.71 5.85 33.49 1.36 7.51 -2.77

2006 63.62 26.00 11.74 3.99 7.75 14.26 6.20 1.64 6.43 31.31 1.26 6.81 -1.76

2007 62.58 27.20 12.16 4.47 7.70 15.04 7.20 1.59 6.24 29.87 1.23 7.22 -2.93

2008 72.50 30.70 12.48 4.38 8.09 18.22 8.41 1.83 7.98 35.75 1.41 9.75 -5.11

EnterprisesHouseholds

Public SectorPrivate Sector

Source: Banco de México, Sources and uses from the economy’s financial funds –balances as percentage of

GDP.

1/ Total portfolio of financial brokers and INFONAVIT. Including restructuring programs.

2/ Total portfolio of financial brokers. Including restructuring programs.

3/ Includes internal debt (historical balance of financial requirements for public sector) reported by SHCP.

4/ Includes total portfolio of financial brokers and issuance of debt instruments.

5/ As defined by the Law of the Bank of Mexico.

The analysis of financing addressed to private sector shows a favorable evolution of credit

to households, particularly to consumptions, as well as housing loans.

Even if credit to enterprises has been the main component of financing to private sector,

after the 1995 crisis it contracted in absolute and relative terms, and has only recovered in

recent years (Graph 2.6).

58

Graph 2.6 Internal financing to private sector in Mexico

Figures as GDP’s percentage

0

5

10

15

20

25

30

35

Jun

-97

Jun

-98

Jun

-99

Jun

-00

Jun

-01

Jun

-02

Jun

-03

Jun

-04

Jun

-05

Jun

-06

Jun

-07

Jun

-08

Jun

-09

Housing

Empresas

Consumption

Internal Private Sector Financing

Source: Banco de México and INEGI.

Graph 2.7 Credit to private sector as percentage of

Gross Domestic Product, 2007.

Figures in billions of USD

Mexico

Argentina

Australia

Brazil

Canada

Chile

China

Colombia

Korea

IndiaRussia

Southafrica

United Kingdom

Venezuela

0

20

40

60

80

100

120

140

160

180

200

$0 $1,000 $2,000 $3,000 $4,000

Cre

dit

o t

o P

riva

te S

ect

or

/ G

DP

GDP in bllion USD

Source: International Monetary Fund. International Financial Statistics (IFS) 2008

59

In order to make an international comparison, the statistics on credit to private sector on

Gross Domestic Product were used together with World Economic Indicators from the

World Bank, using 2007 as the reference year for it is the year before the global financial

crisis. In this regard, the observation is that in spite of the favorable trend during the last

years for the private sector financing growth in Mexico, the international comparison of

private sector financing generally shows that there is still a great financing growth potential

in Mexico for its level is still under those of similar economies (Graph 2.7).

Even if macroeconomic financial inclusion indicators allow easy and homogeneous

comparisons among different regions of the world, these indicators are too aggregated to

fully understand the access and use levels of financial services, as well as their evolution.

Therefore, a demographic and geographic analysis within the country reflects clearly the

situation and potential of the economy to promote a greater financial inclusion.

60

3. Access Indicators

Financial service access indicators allow us to assess the penetration of the financial system

in the country, and thus let us analyze whether the infrastructure of the supply of financial

services is adequate for each type of population. The World Bank11 proposes a series of

indicators that may be compared internationally and so these must be used as a starting

point for developing new indicators related to bank penetration.

Table 3.1 World Bank’s Access Indicators

INDICATOR DEFINITION

1

Penetration

Geographic from bank branches

Number of bank branches per 1,000 kilometers

2 Demogrphic from bank branches Number of bank branches per 10,000 inhabitants ants

3 Geographic from ATMs Number of ATMs per 1,000 kilometers 4 Demographic from ATMs Number of ATMs per 10,000 inhabitants

5

Accounts

Savings per cpaita

Number of deposits per 1,000 inhabitants

6 Credit per cápita Number of credits per 1,000 inhabitants

7

Proportion

Credit income

Average size of credits in relation of GDP per capita 8 Deposit income Averge size o deposits in relation with GDP per capita

Source: The World Bank Group.

The conceptual indicators map proposed in the table 3.1 considers the indicators proposed

by the World Bank as the basis to adequate the information existing in Mexico; however, in

most cases the analysis could be extended to a municipal level. Access indicators enable us

to know the banking infrastructure level (branches, ATMs, point of sale terminals, bank

correspondents, internet and mobile banking - the latter will be included in further reports)

related to population and by area for entering the geographic and demographic

penetration of the financial system.

A high demographic and geographic branch index would show that there is a high access

and the possibilities of serving the demand of financial services are higher in the area.

In this report, these indicators will be analyzed in three different levels: 1) nationally, to

make international comparisons, 2) state level and 3) municipal level. In the scheme below

the geographic relation of indicators may be observed.

11

Thorsten Beck, Asli Demirguc-Kunt and Maria Soledad Martinez Peria. “Reaching Out: Access to and Use of Banking

Services across Countries”, 2005, p. 13.

61

Table 3.2 Access Indicator conceptual map

Geographic Demographic

National, State and Municipality

Branches ATMs POS (1)

Type of indicator

Variable to measure

Detail level

Source: CNBV

Financial service access indicator includes all institutions providing such services to the

population. That is, in Mexico, commercial banks play an essential role, but it is not the

only institution. There are also other institutions that may offer financial products to

sectors that are not served by commercial banks. Among them, Development Banks

(Bansefi and Banjército) and other savings and popular credit entities (Sofipos, Sofoles,

Credit Unions, Sofomes, Cooperative Partnerships). Additionally, there is also the insurance

and pension sector.

Table 3.3 displays different access levels by type of institution. It also shows that there are

institutions that are not regulated but may also offer financial services12. Despite general

access indicators should consider all institutions; this first report focuses on commercial

banking and development banking and other regulated institutions will be included in the

following reports.

12 For example, solidarity saving cajas, NGO’s in microcredit sector and Sofomes.

62

Table 3.3 Financial Service Access by Type of Institution

Served by some financial services

Included in the formal financial sector

Banks

Other

Regulated

Institutions

State-owned

Banks

Non-

regulated

Institutions

Non

served

0% Increase in served population 100%

Source: Based on Kumar et. al World Bank, 2005.

Geographic indicators

These indicators help us characterizing the geographic penetration of financial sector. They

may also be construed as an approximation of the average distance of a potential customer

to the closest physical contact point. Geographic indicators are estimated based on the

number of contact points for every 1,000 square kilometers. The highest the geographic

penetration indicator is, the lower is the distance, and therefore access will be easier. This

type of indicators has a limitation because it assumes a uniform distribution of contact

points in a country; however, the analysis shows us that branches and ATMs are

concentrated in urban areas of the country and are only accessed by persons living in or

near the urban areas.

Internationally13, the published indicators are for the year 2005, and show the number of

branches per geographic area in a range from 0.18 branches for every 1,000 km2 (the

lowest distribution percentage) for countries like Bolivia, Botswana, Namibia, while there

are values from 120 branches for every 1,000 km2 (the highest distribution percentage) in

countries like Belgium, Holland and Singapore. The average for branches is 4.8 for every

13

Thorsten Beck, Asli Demirguc-Kunt and Maria Soledad Martinez Peria. “Reaching Out: Access to and Use of Banking

Services across Countries”, 2005, p. 10.

63

1,000 km2 . Mexico is above the average (considering the value updated to June 2009),

with 5.3 branches for every 1,000 km2.

For ATMs by geographic area14, countries like Tanzania, Zambia, Nepal and Madagascar

have the lowest distribution percentage with less than 0.26 ATMs for every 1,000 km2.

Countries like Japan, Singapore and Korea have the highest percentage with over 253 ATMs

for every 1,000 km2. The average is 10, therefore, Mexico is over the average with 15.3

ATMs for every 1,000 km2. For point of sale terminals, there is no information on the

international average, but Mexico has 228 point of sale terminals for every 1,000 km2.

Table 3.4 Geographic indicators at a National Level

Geographic National Indicators(per 1,000 square kilometers)

Branches ATMs POS

5.3 15.3 228

5.3Source: CNBV / June 2009

The following Mexico’s map shows the geographic distribution of branches per state. For

exemplification purposes, we have created 3 indicator ranges:

1) Superior: over the national average,

2) Average: from 25% below the average to the average,

3) Inferior: from zero to 75% of the indicator.

14 Ibid, p 11.

64

Map 3.5 Number of branches per 1,000 square kilometers (km2)

Branches by each 1,000 square kilometer, km2

Ranges

Without a branch (1,584 municipalities)

Low (<3.96 sbranches per 1,000 km2, 350 m)

Medium (between 3.96 & 5.3 per 1,000 km2, 52 m)

Superior (> 5.3 branches per 1,000km2 , 468 m)

Source: CNBV / June 2009

65

Map 3.6 Number of branches per 1,000 square kilometers (km2)

Branches per each 1,000 square kilometers, km2

Ranges

Without a branch (1,584 municipalities)

Low (<3.96 branches per 1,000 km2, 350 m)

Medium (between 3.96 & 5.3 branches per 1,000 km2, 52 m)

Superior (> 5.3 branches per 1,000km2 , 468 m)


The West-Central region of Mexico presents indicators over the national average, while the

North and Southeast regions of Mexico have a low access level indicator. Given that this is a

geographic indicator, the size of the state has a negative influence for these indicators,

therefore it must be used considering these points.

The following graph presents the geographic indicator for every 1,000 km2 (square

kilometers) from 2001 until June - 2009, only including commercial bank branches15. A

significant increase from 2006 may be observed when the annual average increase until

2008, presenting a 7% average increase going from 8,400 branches in 2006 to 9, 800

branches in 2008.

15 Bansefi and Banjército are not included.

66

Graph 3.7 Historical trends of the geographic indicator

3.613.91 3.88 3.91 4.00

4.22

4.744.94 5.04

2001 2002 2003 2004 2005 2006 2007 2008 Jun - 2009

2.6 %

CAGRa

7 %

CAGR a: Compound Annual Growth Rate Source: CNBV.

Annex 3 contains the state level information where we may find that some states like

Zacatecas and Chiapas had almost no growth in the number of branches, while other states

like Hidalgo and Queretaro grew by more than 70% on the total number of branches during

the period from 2001 to 2009.

In relation to the indicator of ATMs and Points of Sale Terminals, there is no historical

information for there is data only from December 2008, and it is not possible to analyze the

trend of the indicator.

Demographic indicators

These indicators help us capture the demographic penetration of the financial sector and

are the approximate average of persons served at any contact point. Demographic

indicators are estimated based on the number of contact points for every 10,000 adults.

The highest it is the indicator, there are fewer potential clients by branch or ATM, but there

is a better access.

67

Table 3.8 National Demographic Indicators

Demographic National Indicators(per 10,000 adults)

Branches ATMs POS

1.4 4 59

Source: CNBV /June 2009

According to a study conducted by CGAP16 (Consulting Group to Assist the Poor) in 2009,

the average indicator for developed countries is 2.4 branches for every 10,000 adults and of

0.8 branches for developing countries. The same analysis found out that countries like

Ethiopia, Honduras, Madagascar, Tanzania and Uganda have an indicator of barely 0.1

branches for every 10,000 adults, while countries like Austria, Belgium, Portugal, Italy and

Spain have an indicator reaching more than 4.5 branches for every 10,000 adults. Mexico

has 1.4 branches for every 10,000 adults, and is therefore above the average of developing

countries, but quite below developed ones.

16 CGAP. “Financial Access 2009: Measuring Access to Financial Services around the World”, World Bank, 2009.

68

Graph 3.9 International Comparison - Number of branches for every 10,000 adults

0 1 2 3 4 5 6

Cambodia

Kenya

Bangladesh

Angola

Bolivia

Thailand

Brazil

Argentina

Colombia

Mexico

Uruguay

Chile

Germany

Turkey

Canada

Hong Kong China

Iran

Norway

United States

Spain

Denmark

Italy

Portugal

0.37

1.37

5.59

0.8 2.4

International Comparison Source: CGAP

The number of ATMs for every 10,000 adults for developing countries is an average of 2.3;

however, countries like Bangladesh, Nepal, Pakistan and Tanzania only have 0.1 ATMs for

10,000 adults. On the other hand, developed countries have an average indicator of 7.8

ATMs for every 10,000 adults, where Canada, Japan, Portugal and the United States stand

out with over 10. The Points of Sale Terminals for every 10,000 adults presents a greater

dispersion since the average for developed countries is 203 and for developing countries is

barely 17 Points of Sale Terminals for every 10,000 adults.

Mexico has an indicator of 59 POST which means that it has an important growth

potential.

The following map shows the indicators of each state according to the above mentioned

ranges. In this case, we observe how the North region of Mexico has indicators over the

national average, mainly due to a fewer population in a wider territory. Meanwhile, the

Central and Southeast regions have indicators within average ranges but the states of the

South region like Guerrero, Oaxaca and Chiapas have lower indicators.

Map 3.10 Number of branches per each 10,000 adults

Bank Branches per 10,000 adults

Ranges

Without branches (1,584 municipalities)

Low (<1.03 branches per 10,000 adults, 395 municipalities)

Medium (between 1.03 & 1.37 per 10,000 adults, 128 municipalities)

Superior (> 1.37 branches per 10,000 adults, 347 municipalities)


Map 3.11 Number of branches for every 10,000 adults in the country

Ranges

Branches per each 10,000 adults (Zoom)

Without branches (1,584 municipalities)

Low (<1.03 branches per 10,000 adults, 395 municipalities)

Medium (between 1.03 & 1.37 per 10,000 adults, 128 municipalities)

Superior (> 1.37 branches per 10,000 adults, 347 municipalities)


The following graph presents the demographic indicator trend for branches per 10,000

adults from 2001 until June 2009. The indicator includes only branches for commercial

banking17. An average growth of 6% is observed in the last years mainly due to the

opening of more than 400 branches in 2006 by Banamex (137), and other 250 branches of

BBVA Bancomer, Santander, Banorte, IXE, Scotiabank and Azteca. For 2007, the

incorporation of new banking institutions allowed the opening of more than 1,000

branches, 400 out of which correspond to new banks such as Famsa and Coppel and the

remaining to Banamex and Bancomer with 100 branches each and the others to

Scotiabank, Banorte and Santander.

17

Bansefi and Banjército are not included.

Graph 3.12 Historical trends of the demographic indicator

0.730.78 0.76 0.76 0.77

0.80

0.890.92 0.93

2001 2002 2003 2004 2005 2006 2007 2008 Jun - 2009

1.4 %CAGRa

6 %

CAGR a: Compound Annual Growth Rate Source: CNBV.

Indicators per state

The indicators per state comprise the geographic and demographic indicators for all

branches, ATMs and Points of Sale Terminals. We may observe that only 5 states have at

least one bank in the total (100%) of its municipalities. In the vast majority of the Mexican

states the percentage of their municipalities with bank branches varies from 40% to 60%,

but there are extreme cases like Oaxaca where only 6% of its municipalities have a bank.

As it has already been mentioned, these indicators must be taken with some reserves

since, for example, in the case of Mexico City, and due to its small surface, the geographic

indicators are far above all other states; however, demographic indicators reflect better

the presence of financial service points. On the contrary, states like Baja California Sur

have very few population, its demographic indicators are above all others.

Table 3.13 Access Indicators per Mexican - State

Source: CONAPO and CNBV / June 2009.

Graph 3.14 Percentage of Municipalities with

Bank Branches by State

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Baj

a C

alif

orn

ia

Baj

a C

alif

orn

ia S

ur

Me

xico

Cit

y

Sin

alo

a

Tab

asco

Gu

anaj

uat

o

Qu

inta

na

Ro

o

Cam

pe

che

Jalis

co

Co

lima

Co

ahu

ila

Nay

arit

Qu

ere

taro

Nu

evo

Leo

n

Mex

ico

Mo

relo

s

San

Lu

is P

oto

si

Tam

aulip

as

Mic

ho

acan

Agu

asca

lien

tes

Hid

algo

Zaca

teca

s

Du

ran

go

Gu

err

ero

Ver

acru

z

Ch

ihu

ahu

a

Ch

iap

as

Son

ora

Tlax

cala

Pu

ebla

Yuca

tan

Oax

aca


Table 3.15 Access Indicators per State

Source: CNBV & CONAPO /June 2009

Graph 3.16 Percentage of Municipalities with Automated Teller Machines

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Baj

a C

alif

orn

ia S

ur

Me

xico

Cit

y

Sin

alo

a

Tab

asco

Gu

anaj

uat

o

Agu

asca

lie

nte

s

Qu

inta

na

Ro

o

Nay

arit

Ba

ja C

alif

orn

ia

Co

lima

Co

ahu

ila

Cam

pe

che

Jalis

co

Nu

evo

Leo

n

Zaca

teca

s

Me

xico

Tam

aulip

as

Mo

relo

s

Qu

ere

taro

Hid

algo

Du

ran

go

San

Lu

is P

oto

si

Ch

ihu

ahu

a

Mic

ho

acan

Ver

acru

z

Ch

iap

as

Gu

err

ero

Son

ora

Tlax

cala

Yuca

tan

Pu

ebla

Oax

aca


Another way of analyzing these indicators is by geographic zone where states are

gathered in groups of 6 according to the classification of the Mexican National

Development Plan: South-Southeast, Central, West Center, Northeast and Northeast.

Mexico City is separately considered due to the high population and financial service

concentration which causes deviations for the indicator. Thus, graph 3.17 shows the

average demographic indicator for each region in relation to bank branches.

Graph 3.17 Number of branches for every 10,000 adults

1.64 1.72

1.41

1.05 0.97

2.44

North-East North-West Central-West Central South-SouthEast Mexico City

1.37


Graph 3.18 Number of branches for every 1,000 km2

2.7 2.8

5.7

23.8

3.9

1,121

North-East North-West Central-West Central South-SouthEast Mexico City

5.3



Annex 1 show tables by each state of the country with their municipalities and geographic

and demographic indicators, both for bank branches and ATMs. As for now, there is no

number of Points of Sale Terminals at a municipal level. These indicators allow a more

detailed analysis of the areas with lower access to financial services.

The following table shows a classification by municipalities according to the size of the

population. This classification is aimed to analyze indicators without the deviation from

comparing municipalities with high population density with lower density municipalities.

For the analysis of these indicators, six types of localities are defined with the following

criteria:

Table 3.19 Classification of municipalities by inhabitant range

Rural 0 5,000In transition 5,001 15,000Semi-urban 15,001 50,000Urban 50,001 300,000Semi-metropolitan 300,000 1,000,000Metropolitan 1,000,000 -

Type of Population Inhabitants Range

Source: CNBV

Mexico has a total of 2,456 municipalities, 64% for which there are no bank branches,

while 63% have no ATMs.

Table 3.20 Percentage of municipalities without branch or ATM

Source: Banco de Mexico and CNBV / June 2009

Graph 3.21 Demographic indicator for branches for type of municipality

0.33

0.640.67

1.23

1.841.78

Rural In Transition Semi - Urban Urban Semi - Metropolitan Metropolitan

1.37

Source: Banco de Mexico and CNBV / June 2009

Economic growth and access to financial services

There is a theoretical and empiric uphold allowing us to state that the access to financial

services represents an engine for economic development. The economic theory states

that financial intermediaries fulfill functions that allow for the reduction of transaction

costs related to the channeling of funds between savings and investments, positively

affecting economic growth18. Among these functions, the role of banks and other

financial intermediaries as agents moving savings is fundamental since they articulate

payment systems and manage risk portfolios. In this section we present the result of an

analysis to determine some relationship between the number of branches in each state

and the GDP by state. We may observe the clear positive relation between economic

growth and total number of branches in the states on graph 3.22.

Graph 3.22 Correlation between GDP and the number of bank branches

Tabasco

Mexico City

Guanajuato

Jalisco

Mexico StateNuevo León

Veracruz

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0 500 1,000 1,500 2,000 2,500

Campeche

GDP 2008 (billions)

Number of Branches

R2 = 89%

The positive correlation between per capita GDP and the demographic branch indicator is

observed on graph 3.23. However, there are statistics with the same per capita GDP level

as Hidalgo, Veracruz, Nayarit and Michoacán and they have different demographic

indicator levels. For example, Campeche outstands for having an important deviation in

relation with the general trend. Campeche has a GDP over the national average and the

18

Liliana Morales, Álvaro Yánez. “La Bancarización en Chile”, Superintendencia de Bancos e Instituciones Financieras de

Chile, 2006, p. 4.

highest per capita GDP, but it is one of the states with the lowest number of branches.

This may be explained by observing that the population in this state is the third lowest in

the country and therefore its indicator for branches per 10, 000 adults is 0.81, reaching

place number 17. Thus, Campeche has a branch demographic indicator below the national

average.

Graph 3.23 Per capita GDP and demographic indicator

Chiapas

Coahuila

Mexico Citty

Jalisco

Hidalgo

Michoacan

Zacatecas

Nuevo Leon

Oaxaca

Veracruz

Querétaro

Sonora

Tabasco

Nayarit

0.00

0.50

1.00

1.50

2.00

2.50

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000

Number of Branches per 10,000 adults

GDP per Capita

Campeche(856,611, 0.81)

R2=69%

900,000

4. Usage Indicators

In contrast with access indicators – where information is obtained from regulatory reports

produced by financial institutions – the usage of financial service indicators could not be

calculated in the same way because of methodological limitations. For example, the total

number of savings accounts exceeds the number of customers using them, since one

person may have several accounts.

Therefore, the best sources of more precise information in order to prepare usage

indicators are household or individual surveys. Nevertheless, for preparing this first

report, regulatory reports provided by banks to the CNBV were used as source of

information in order to establish a base line to observe the development of these

indicators in the meantime we generate more precise information.

According to the conceptual map for usage indicators below, this report will analyze some

products and particularly the number of accounts per 1,000 adults.

This first exercise presents deposit accounts and its main products: Checking accounts,

saving accounts, payroll accounts, term deposit accounts and debit cards. Additionally, we

present the credit card indicator. Indicators for the number of personal and mortgage

credits will be presented in the following reports.

Usage indicators will be analyzed in three levels just as we did with the access indicators:

Nationwide, state and municipal. In this way we may compare Mexico at an international

level and make a detailed analysis to detect opportunities to increase the use of financial

products and services in the country.

Table 4.1 Usage Indicator conceptual map

Products

National State Municipal

Deposit Credit

Saving accounts

Accounts of checks

Payroll Accounts

Time line Deposits

Debit CardCredit Card

Source: CNBV

Deposits indicators.

In order to obtain information for these indicators, a census on the number and

characteristics of the persons having an account on any financial institution would be

ideal. Lacking of this census, the second best option is a survey representing all

population and population segments providing us information on the type of the most

used financial services, the use periodicity, the prices and the complementary data of the

socio-economic situation for households using such financial products. Since the vast

majority of household surveys in Mexico are not addressed to financial services, the

information that may be obtained is limited, therefore, in order to make this first exercise

we considered the information provided on the regulatory reports of commercial banks.

In addition to the limitation above mentioned as to holding multiple accounts

(overestimating the indicator) this first exercise only considers the information about

banking institutions, thus, the indicator would be underestimated in relation to the total

institutions in the country.

Gradually, as other institutions than commercial banks start offering similar financial

services and products, their information will be included in these indicators.

Deposit indicators for every 1,000 adults are presented by product in order to observe the

most used products by region. Debit cards may be considered as the most relevant

indicator as to the number of accounts since they are generally related to the opening of

another deposit product as savings, checking or payroll account.

In the international environment19 and in a study performed by CGAP with data up to

2009, high income countries such as the United States, Canada, Australia, France and

Spain have more than 2,000 deposit accounts for every 1,000 adults. On the other hand,

low income countries have an indicator of only 100 accounts for every 1,000 adults,

among these countries there are Ethiopia, Congo, Madagascar and Mauritania. This study

considers deposit, checking and term investment accounts, but does not provide any

other detail so a comparison with Mexico may be confusing. If we only consider the

number of debit cards, Mexico has 652 accounts for every 1,000 adults (this product may

include any other like a payroll account). To make the comparison more real, we consider

the addition of the payroll product, checking accounts, and term deposits, and Mexico

would have 934 accounts for every 1,000 adults.

Within deposit accounts, the payroll account is the most used having 337 accounts for

every 1,000 adults, and the less used are term deposit accounts with only 40 accounts for

every 1,0000 adults.

Table 4.2 Fund raising indicators

Number of accounts for every 1,000 adults

Savings

Accounts

Checking

Accounts

Payroll

Accounts

Term

DepositsDebit Cards

323 234 337 40 652

Deposit indicators

(Number of Accounts per 1,000 Adults)


19 World Bank. “Finance for All? Policies and Pitfalls in Expanding Access”, 2008, p. 33-39.

Credit indicators

As to credit indicators, it is presented the number of credit cards for every 1,000 adults.

We do not know the recent international references to make a comparison. In the case of

Mexico, there are 349 credit cards for every 1,000 adults.

Table 4.3 National (Credit) Usage indicators

Credit indicators

(Number of Accounts per 1,000 Adults)

Credit Cards

349


As shown on Annex 3, the increase of credit cards in some states between 2001 and 2009

represents over 500 percent, however, the increase in the number of cards does not

correspond to the economic development of the states during the same period.

Moreover, states like Zacatecas and Coahuila have had an increase surpassing the one of

Mexico City for the same period of time. On the other hand, Oaxaca only had a growth of

20% and Tlaxcala and Durango decreased by -23% and - 35%, respectively.

Indicators per State

State indicators allow us to observe the number of accounts for every 1,000 adults in each

Mexican state.

For example, without considering Mexico City, where there is the biggest concentration of

financial products, the state of Colima presents the greatest number of checking accounts

for every 1,000 adults totaling 419. As to savings accounts, Aguascalientes, Zacatecas and

Baja California Sur present high indicators in relation to the national average, with 437,

431 and 379 respectively. The states with the lowest use of products are Oaxaca, Chiapas

and Tlaxcala.

The following table shows usage indicators both for deposits and credit cards by each

Mexican state.

Table 4.4 Use Indicators by Mexican States

State AdultsChecking

Accounts

Savings

Accounts

Payroll

Accounts

Time Deposits

InvestmentsDebit Cards Credit Cards

México 10,656,715 144 282 170 27 463 121

Distrito Federal (Mexico City) 6,888,272 449 561 887 89 1,394 1,973

Veracruz 5,200,517 201 250 233 31 431 151

Jalisco 5,005,344 284 322 392 45 717 270

Puebla 3,897,873 159 265 160 37 430 109

Guanajuato 3,469,242 206 332 311 48 598 309

Nuevo León 3,246,923 312 371 548 50 892 352

Chiapas 2,995,315 118 316 136 26 420 116

Michoacán 2,778,938 167 291 134 42 481 147

Oaxaca 2,454,180 120 212 121 31 337 58

Chihuahua 2,427,689 266 244 496 30 675 185

Tamaulipas 2,311,172 282 386 433 41 764 195

Baja California 2,294,435 311 276 551 26 748 218

Guerrero 2,107,764 173 346 212 33 501 90

Sinaloa 1,912,416 398 307 343 31 720 188

Coahuila 1,867,987 266 315 448 31 752 520

Sonora 1,797,539 326 268 340 26 700 221

San Luis Potosí 1,718,217 157 330 272 44 503 133

Hidalgo 1,706,281 221 298 228 52 507 144

Tabasco 1,445,572 203 319 280 21 822 139

Yucatán 1,397,286 207 211 239 33 436 192

Morelos 1,215,293 271 331 291 46 576 166

Querétaro 1,213,538 214 258 393 26 560 157

Durango 1,077,900 186 278 189 35 486 205

Zacatecas 962,082 136 431 158 69 585 149

Quintana Roo 947,714 238 298 338 19 768 176

Tlaxcala 789,314 128 274 143 28 480 73

Aguascalientes 781,825 188 437 406 42 848 386

Nayarit 692,765 188 305 233 42 811 154

Campeche 567,816 186 323 368 30 673 440

Colima 439,087 419 326 342 37 666 531

Baja California Sur 411,910 377 379 340 21 822 157

NATIONAL 76,678,921 234 323 337 40 652 349

National without Mexico

City69,790,649 213 299 283 35 579 189

min 118 211 121 19 337 58

max 449 561 887 89 1,394 1,973

Use indicators by Mexican States

Deposits

by each 1,000 adults

Credit

by each


Graph 4.5 Percentage of municipalities with debit card

50%

60%

70%

80%

90%

100%B

aja

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Su

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Co

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ila

Co

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Me

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Cit

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Gu

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Sin

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a

Tab

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Yuca

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Hid

algo

Ver

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Du

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go

Nu

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Leo

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Agu

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s

Cam

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che

Tam

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as

Nay

arit

Son

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San

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is P

oto

si

Jalis

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Mo

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s

Zaca

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s

Gu

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ero

Ch

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Financial service usage indicators at a municipal level for each state may be consulted on

Annex 2.

The same classification for municipalities that was explained for access indicators is also

applied to usage indicators: Rural, in transition, semi-urban, urban, semi-metropolitan and

metropolitan municipalities. The following table shows a summary of indicators for each

type of population.

Table 4.6 Summary of usage indicators per type of municipality for every 1,000 adults

Type of MunicipalitySavings

Accounts

Checking

Accounts

Payroll

Accounts

Term

Deposits

Debit

Cards

Credit

Cards

Rural 13 61 12 7 100 12

In transition 63 127 92 22 198 38

Rural 87 203 67 30 281 50

In transition 217 346 224 40 582 140

Rural 344 400 564 49 952 796

In transition 278 339 493 42 775 290


Final Comments

Financial inclusion has become a very relevant concept internationally during the last

years. The creation of institutions operating microfinance and their proved profitability

have promoted other institutions to explore the market segment they serve and whose

potential is still big due to the number of persons who still do not have any access to

financial services. The use of new technologies and innovative business models offer the

opportunity to financial institutions to satisfy the demand of financial services at lower

costs and to reach remote places or with low population indexes. For this reason, it is

fundamental to provide the market with information that could make easier the decision

making process and the development of new financial products and services.

Even financial inclusion indicators in Mexico have shown better performance during the

last few years, particularly in savings mainly due to the evolution of the pension fund

system, Mexico faces significant opportunity areas in comparison with similar economies.

Although the macroeconomic indicators allow relatively easy and homogeneous

comparisons between different economies, they do not show a clear assessment of the

financial service access and use situation for the population. Therefore, an analysis of

access and use of financial services at demographic and geographic level is relevant to

have a better assessment of the opportunity areas in order to promote more and better

financial services for the population.

The growth of infrastructure has mainly focused in urban areas so as of June 2009, 64% of

all municipalities (1,584 out of 2,456 municipalities) did not have any bank branches. Also,

it is worth noted that the financial infrastructure is focused mainly in the Center-West

region of Mexico.

Given the demographic dispersion of the country and the costs for opening bank branches

in some regions, the increase of financial service access must consider new business

models. For example, the use of distribution channels in areas with low banking

penetration by means of banking agents (correspondents) and mobile banking by means

of the familiarity many people have with the use of mobile telephones.

Also, financial non-banking institutions are present and are socially settled in many

regions of the country, placing them in a preponderant role to promote financial inclusion.

The development of new business models requires strategic alliances among private,

public and social sectors.

Additionally, the analysis by state-based GDP and the number of branches leads to the

conclusion that there is a positive correlation between the level of economic development

and the presence of financial infrastructure.

The use of more traditional banking products has increased in the last years. Within credit

products, the number of credit cards represents the greatest increase from 6.7 million to

25 million between 2001 and 2009. For deposit taking, debit cards are linked to several

saving products and therefore we may consider them as a leading indicator for the use of

such products. This indicator shows that there is almost one card for every two

inhabitants, which indicates that there is still a wide growth potential in comparison with

other countries where everybody has more than one debit card.

The analysis by municipality indicates that the biggest concentration of debit cards is in

urban municipalities. That is the case of metropolitan areas (municipalities with more than

one million inhabitants) where even the number of credit cards for every one thousand

adults is lower than the one for debit cards.

Bibliography

Banco de México. Report On Financial System 2009, and statistical data. Internet

(www.banxico.org.mx).

CGAP. “Financial Access 2009: Measuring Access to Financial Services around the

World”, Septiembre 2009, pp. 81.

Eswar Prasad. “The future of financial regulation”, en The G-20 Financial Summit:

Seven issues at Stake, publicado por The Global Economy and Development

Program at the Brookings Institution, Noviembre 2008.

International Monetary Fund. International Financial Statistics; Publications

Services; Washington D.C. 20431; Mayo 2009.

Liliana Morales, Álvaro Yánez. “La Bancarización en Chile”, Superintendencia de

Bancos e Instituciones Financieras de Chile, 2006.

Mandira Sarma. “Index of Financial Inclusion”, Indian Council for Research on

International Economic Relations, Working Paper No. 215, Junio 2008, pp. 20.

Mexican Munipalities. Internet (www.municipios.com.mx).

Michael S. Barr, Anjali Kumar y Robert E. Litan. “Building Inclusive Financial

Systems: A framework for Financial Access”, Brookings Institute Press; Washington,

D.C., 2007, pp. 198.

Ministry of Internal Affairs (Secretaría de Gobernación). E-local, Información

estadística de municipios en México. Sitio Oficial en Internet (www.e-local.gob.

mx/wb/ELOCALNew/municipios).

National Banking and Securities Commission (CNBV). Statistical data on Regulatory

Reports.

National Population Council (CONAPO). Statistical information on population.

Internet (www.conapo.gob.mx).

National Institute on Statistics and Geography (INEGI). Statistical data. Internet

(www.inegi.org.mx).

The International Bank for Reconstruction and Development, The World Bank

Group; “Banking the Poor. Measuring Access in 54 Economies”, 2009, pp. 104.

The World Bank Group. “Finance for All? Policies and Pitfalls in Expanding Access”,

World Bank Policy Research Report; 2008, Washington, D.C., pp. 246.

The World Bank Group and the International Financial Corporation (copublication).

“Doing Business in Mexico 2007. Comparing Regulation in the 31 States and

Mexico City”, November 2006, pp. 80.

http://www.banxico.org.mx/

http://www.municipios.com.mx/

http://www.conapo.gob.mx/

http://www.inegi.org.mx/

Thorsten Beck, Asli Demirguc-Kunt y María Soledad Martínez Peria. “Reaching out:

Access to and use of banking services across countries”, The World Bank Group,

Draft September 2005, pp. 52.

ANNEX 1

Access indicators per Municipality

The geographic and demographic indicators for branches and ATMs for the 2,456

municipalities in the country are presented below in alphabetical order and grouped by

state. For each state the name of the municipality is written followed by the surface in

square kilometers (km2), its economically active population which is used as equivalent of

an adult population that is aged over 15 years, for the purpose of this report, and the type

of municipalities according to the classification developed by the CNBV for the purposes of

this report (See table).

ANNEX 2

Usage Indicators by Municipality

ANNEX 3

Historic Trend Indicators by State

Annex 3 presents annual historic information for the period between 2001 and 2009 for

demographic indicators for every 10,000 inhabitants and geographic access indicators for

every 1,000 km2 at a Mexican State level, together with historic usage indicators for the

number of credit cards for every 1,000 inhabitants.

The information from 2001 to 2008 is considered up to each December while the

information presented for 2009 is for June.

ANNEX 4

Statistical information by Mexican

States

ANNEX 5

Statistical Information by Municipality Annex 5 presents a list in alphabetical order for each of the 2,456 municipalities in Mexico,

the Mexican State to which they belong, adult population (Estimated for 2009 by

CONAPO), type of population (urban/rural) , number of bank branches, number of ATMs,

number of debit cards and number of credit cards as of June 2009.

This first Report is aimed to look for the advancements in the promotion of financial

services and opportunities that exists in Mexico. The information on this report about

branches, automatic teller machines (ATM), and financial products was obtained from

regulatory reports provided by supervised institutions to the CNBV, particularly on

regulatory report 24 (R.24). The information on points of sale terminals (POS) was

obtained from the Bank of Mexico and does not contain municipal data. For geographic

information (municipalities) the data bases of the National Institute on Statistics and

Geography (INEGI) have been used. The population estimation for the year 2009 was

obtained from the National Population Council (CONAPO).

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