The Effects of Crime on MFI Performance and Access to Finance in Mexico

This paper examines the potentially negative effects of crime on MFI financial performance in a case study for the MFI, Financiera Independencia. Using state fixed effects in time series regressions, the author estimates various measures of crime as well as economic controls to better understand the drivers of financial performance. The paper aims to elucidate MFI-level decisions regarding where to locate in the face of crime. To help visualize the expansive growth of offices from 2006-2010, the author then introduces a new way to measure the effects of crime using a series of maps for a second MFI case study, Caja Popular. Ultimately, the author finds that crime indeed negatively impacts MFI financial performance, though checks for robustness limit the explanatory power of the regressions