What promotes access to financial services and causes financial exclusion in Latin America and the Caribbean?

Abstract Access to financial services is crucial for economic development, yet many households continue to face barriers that limit wealth accumulation, resilience, and quality of life. Limited access to formal financial services restricts participation in the formal economy. It may exacerbate poverty and inequality, particularly in Latin America and the Caribbean, where economic growth is often volatile. This study analyses financial inclusion across 19 Latin American and Caribbean countries using 2021 data from the Global Findex database. It examines account ownership, savings, borrowing, digital payments, barriers to financial access, and selected dimensions of financial health. The results show that higher education, higher income, urban residence, employment, internet access, mobile phone ownership, and post-COVID changes in payment behavior are associated with greater financial inclusion. Conversely, lower education, lower income, and rural residence are associated with a higher probability of financial exclusion. The analysis further distinguishes between voluntary and involuntary barriers to financial access. Wald test results indicate that the association between internet access and financial exclusion differs significantly between these two types of barriers. Internet access is associated with a lower probability of involuntary exclusion, particularly barriers related to distance and cost, but it does not reduce all forms of exclusion. The financial-health results show that higher income and savings at a formal financial institution are consistently associated with lower financial concern and greater financial control. Internet access is positively associated with financial control, but not consistently with other dimensions of financial health. These findings suggest that policies aimed at strengthening financial inclusion in the region should combine digital financial infrastructure with financial education, affordability measures, and targeted support for vulnerable groups.