The Determinants of Formal Savings in Mexico: The Role of Financial Capabilities

Financial education has become one of the most important strategies in the public and private sector to develop financial capabilities in the population with the main purpose of promoting responsible financial inclusion. Therefore, we analyze the financial capabilities of the banked population in Mexico and their effects on savings habits using the National Survey of Financial Inclusion (ENIF) 2012. Estimating probabilistic models and controlling for basic and applied financial capabilities variables, we measured the effect on the probability of saving and in the formal investment accounts tenure.

In this paper, the basic financial capabilities were defined as the ability to planning, budgeting and anticipate for emergencies. The applied financial capabilities as the knowledge about financial products, ergo people who know the costs of using savings accounts or who knows that savings are protected by a federal deposit insurance.

We found a strong relation between the basic and applied financial capabilities and the increase in the probability of using the savings accounts even controlling for education or income variables. We also found that applied financial capabilities have a positive effect on the probability of having an investment account. We found no significant effect of basic financial capabilities on the probability of having an investment account, but we conclude that there is an indirect effect of encouraging savings.