Challenges of the Mexican Financial System: Empirical Studies on Financial Inclusion and Banking Competition

The research presented in this PhD Thesis provides new empirical evidence on the dynamics of financial inclusion and banking competition in Mexico. By studying the probability and the determinants of establishing a branch (chapter 1), developing an innovative index of inclusion (chapter 2), constructing a series of indices of inclusion on time (chapter 3), incorporating a geographic visualization (chapter4), and analyzing the role of multimarket contacts in competition (chapter 5), this work advances the understanding of structural and behavioural factors shaping the Mexican financial system. In analyzing financial inclusion, a central focus of this thesis is the study of geographic disparities. The availability of municipal-level data enabled the analysis to be conducted at a highly disaggregated scale, thereby uncovering local heterogeneities that are often concealed within national or aggregate statistics. Moreover, the recognition of the multidimensional nature of financial inclusion constitutes a distinctive feature of the approach taken in three of the articles included in this dissertation. These contributions examine not only the dimension of access, but also usage, along with several relevant subdimensions within both categories, thus providing a more comprehensive and nuanced picture of financial inclusion in Mexico. With regard to banking competition, the research extends beyond traditional measures of market structure and performance to explore the dynamics of bank behavior under conditions of municipal multimarket contact (MMC). By examining how geographic overlap and the intensity of multimarket interactions affect competitive conduct, the analysis offers a more nuanced perspective on the determinants of market power, complementing conventional competition analysis.