Social capital, trust, and the use of financial institutions in Mexico

Motivated by the link between financial development and economic growth, this article considers the relationship between individuals' trust levels and their participation in Mexico's financial system. Regression estimates show that high trust individuals are more likely to open an account, and this correlation is stronger among people with low education. Also, people tend to rely less on loans from family and friends once they open accounts, especially high trust individuals. Additionally, people who open accounts are not less likely to participate in other informal savings mechanisms, which suggest there is no crowding out between formal and informal savings.