Analysis of the impact of the 2014 financial reforms on Mexican cooperative financial institutions

Abstract

The aim of this paper is to determine if the 2014 reforms on the regulations of the Mexican Cooperative Financial Institutions, had an impact on the growth of such entities, wich facilitate financial inclusion. To this end, we analyzed six databases of the Cooperative Financial Institutions (SOCAPS in Spanish) from Mexico: two related to their behavior (number of companies and number of branches), and, four of them, as proxies for financial inclusion (loan accounts, divided into commercial, consumption and housing). These six databases were analyzed using the Chow test for structural stability, and the structural analysis with dummies, on the basis that the financial reform caused a structural change in 2014. In addition, we observed the trend in the behavior of the six databases from a graphical perspective. The results show the financial reform of 2014 actually caused a structural change in five of the six analyzed variables, as well, that, in the cases where the structural change occurs, this was both in the slope and in the ordinate, thus, this affected both the trend, and the number of variables. Based on this results, we concluded: a) the financial reform of 2014 actually caused a structural change in the SOCAPS; b) the financial reform had a positive impact on the growth of Mexican SOCAPS, that caused an increase in the number of companies and branches; c) the financial reform increased the amount of credits granted by SOCAPS, which positively impacts financial inclusion; and, c) the objectives of the 2014 financial reform were achieved.