Financial Inclusion, Productivity Shocks, and Consumption Volatility in Emerging Economies

Bhattacharya, Rudrani ; Patnaik, Ila

World Bank, Washington, DC

关键词: GROWTH RATES;    MONETARY POLICY;    DEPOSIT;    FINANCIAL SERVICES;    FOREIGN CAPITAL;   

DOI  :  10.1596/1813-9450-7288
RP-ID  :  WPS7288

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

How does access to finance impactconsumption volatility? Theory and evidence from advancedeconomies suggests that greater household access to financesmooths consumption. Evidence from emerging markets, whereconsumption is usually more volatile than income, indicatesthat financial reform further increases the volatility ofconsumption relative to output. This puzzle is addressed inthe framework of an emerging economy model in whichhouseholds face shocks to trend growth rate, and a fractionof them are financially constrained, with no access tofinancial services. Unconstrained households can respond toshocks to trend growth by raising current consumption morethan the rise in current income. Financial reform increasesthe share of such households, leading to greater relativeconsumption volatility. Calibration of the model for pre-and post-financial reform in India provides support for themodel’s key predictions.