Financial Inclusion Report

A biannual report aimed at communicating the state of financial inclusion in the country, the measures adopted in this area and, through specific metrics, monitoring the progress of the population’s financial inclusion.

Executive summary

• Financial service access points (PDAs) registered an increase of 4.8% between December 2021 and December 2022 and maintained the percentage of the adult population living in localities with PDAs at 92.5%.

• Bank and/or payment account coverage reached almost the entire adult population (99.3%) at the end of 2022. The number of individuals (PH) who had at least one account stood at 35.1 million compared to 34.6 million in June 2022 (98.5%). With values above 95%, the NOA, Cuyo and Patagonia regions were at account holding levels close to full coverage while the Center and NEA have already reached it.

• Joint bank and payment account tenure reached record levels in several segments of the population. In December 2022, joint tenure marked maximum coverage values in the age range of 25 to 29 years, reaching 76%. However, the holding of both types of accounts is relatively low in the age ranges of 15 to 19 years old and 60 to 64 years old.

• Electronic means of payment (EMP) continued to set all-time highs. Each individual made an average of 17.8 monthly payments for MPE in 2022, a record value that practically triples the record prior to the COVID-19 pandemic. Those MPEs whose commissions are zero or reduced and the availability of the funds is immediate for the recipient (Transfers and Payments with Transfer) were highlighted.

• The use of mobile banking to carry out transactional operations in financial institutions (EEFF) grew significantly between 2019 and 2021. While around 10% of individuals with a bank account had carried out a transactional operation in the last quarter of 2019, the same indicator rose to 31% in the same period of 2021.

After the COVID-19 pandemic, a change in behavior is observed in the electronic channel chosen for transactions, with mobile banking gaining relevance over home banking.

• The average transaction with MPE fell for the second consecutive year (19% year-on-year in real terms in 2022). This performance, in a context where the real amounts operated by adults grew, indicates the advance of the use of electronic wallets and mobile banking in everyday payments since they involve payments for smaller amounts.

• Increases in returns had a positive impact on savings and investment products. In December 2022, the number of PH fixed terms in local currency was 6.9 fixed terms per 100 bank accounts in pesos, which represented a 53% year-on-year increase in this metric. Compared to 2021, there was a shift towards short- and medium-term products (mutual funds and fixed terms) and a contraction of account balances with immediate liquidity (account balances and money pools).

• As of December 2022, 54.5% of the adult population had financing from the expanded financial system (SFA). Consolidating two years of sustained growth, the number of PHs financed by the SFA had a net increase of 1.6 million during 2022 and reached 19.2 million in December. However, during the same period, the total PH financing balance in the SFA fell 13% in real terms, so the average balance per debtor continues on a downward path.

• The type of income significantly influences the level of the average debt balance of the PHs. As of December 2022, more than half of the PHs that registered credit products had a formal salary for their work in a dependent relationship or a retirement for having reached the corresponding age. PHs that have a salary register an average balance per debtor that doubles that of those debtors who would have an independent job.

• The number of MSMEs with SFA financing reached 1.04 million companies in December 2022, registering an increase of around 216,000 productive units compared to the same month in 2021. The financing balance registered a fall of 14% year-on-year at constant prices, due to the decrease in the average debt balance.

• The average balance of women’s MSMEs (MSMEs-M) is considerably lower than that of men’s MSMEs (MSMEs-H). As of December 2022, the average balance corresponding to PHs classified as MSMEs-M represented 47.6% of the average balance of an MSME-H, showing a gender gap in terms of the amount financed that remained at similar values during the last two years. The difference in average balance to the detriment of MSMEs-M is found in all sizes of companies (to a greater extent for the largest ones) and in all economic sectors.

• Between 2019 and 2022, there was a deepening in the financial inclusion of young people (15 to 24 years old). The number of people with bank and/or payment accounts grew 27% between March 2019 and December 2022 (+7.6 million people). The age range of 15 to 24 years old was the one that contributed the most to this growth, accounting for 9.6 p.p. Information from the end of 2022 suggests that the number of young people opening their first account through an EEFF or a PSP is similar. In the case of access to financing, significant changes were observed between EEFF and PNFC. A greater inclusion of young age ranges is highlighted, mainly explained by the PNFCs.

Indicator Table | Financial inclusion in Argentina

Notes
(1) This includes access points for financial institutions (branches, mobile branches, ATMs, self-service terminals and complementary financial services agencies) and ATMs operated by non-financial institutions.
(2) Monthly average for each year.

Local context

In 2022, the financial inclusion process in Argentina was framed in a context of improved economic activity and the employment rate, a widespread use of mobile devices and, within the framework of the monetary policy implemented, a growing trend in reference interest rates.

Economic activity continued to improve during 2022 and reached levels higher than those of 2021. The Monthly Estimator of Economic Activity (EMAE) showed 5.2% annual growth for the year 2022 ¹ . Private consumption evolved along the same lines ² , expanding by 9% in 2022 compared to the previous year.

In the labor market, the employment rate for the main urban agglomerations remained at historically high levels, reaching 44.6% in the fourth quarter of 2022. This mark is the highest since 2003, coinciding with the rate recorded in the second quarter of 2022. One of the features of this growth in the employment rate is that it is associated with the growth of the activity and employment rate of women to a greater extent than that of men³ . For its part, the income of salaried people showed a reduction of almost 3% in real terms in the second half of 2022 compared to the same period in 2021. However, differentiated behaviors were observed between those corresponding to registered and unregistered workers. Incomes in real terms contracted more for unregistered workers⁴.

For their part, the benchmark lending and passive interest rates showed an upward trend between June and September 2022, before stabilizing in the last quarter of the year. In the third quarter of 2022, the Central Bank of the Argentine Republic (BCRA) raised its monetary policy rate with the aim of preserving exchange rate and financial stability by bringing it to positive values in real terms. Between the end of June and September 2022, the monetary policy rate increased by 23 p.p., while the fixed-term rate increased by around 21 p.p. and the rate on signature document loans and personal loans rose by around 18 p.p. in the same period.

On the side of the perceived demand for financing, in the second half of 2022 financial institutions (FFSEs) continued to observe a reduction in the business segment (both small, medium and large)⁵. Regarding the demand for credit from households, the EEFF pointed to the support of the credit card segment and other consumer loans. Demand for collateral loans was relatively weak. At the same time, the BCRA maintained incentives for access to financing.

Access to digital infrastructure is essential to facilitate financial inclusion. Residential mobile internet accesses expanded by around 9% in the third quarter of 2022, reaching just over 32 million accesses⁶. In terms of cell phone subscriptions per 100 inhabitants, Argentina (130.5) was above the average for Latin America and the Caribbean (108) and for countries that share the same income category (upper middle, 123)⁷. The cost of fixed broadband services in Argentina, in terms of monthly gross national income per capita (GNI), was 14% above the average of a selection of Latin American countries and exceeds between 3 and 4 times the cost of developed countries such as Canada and the United States⁸. On the other hand, the cost of mobile broadband services in relation to the monthly GNI was 13% below the Latin American average and doubles the cost of developed countries such as Canada and the United States. For their part, users in Argentina spent an average of 3.9 hours per day on their cell phones, 8.3% more than the previous year⁹. In this sense, downloads of mobile banking applications and electronic payment wallets grew by 16% in 2022, reaching 42.8 million downloads¹⁰.

State of the situation. In this context, the state of financial inclusion stands out for an almost total coverage of the population in the holding of accounts, mainly bank accounts, and a greater participation of the population in electronic channels to carry out transactions (See Section 1). This increase is reflected in the dynamics of payments and transactions by electronic means, where the decrease in the average amount per transaction (in a context of an increase in the amounts operated per adult) indicates a greater penetration of digital payments in people’s daily lives. Likewise, in the last two years, the expansion of the PNFC as a source of financing for individuals (PH) was highlighted and, although to a lesser extent, contributions from public banks were also observed. Both providers explained the increase in PHs with financing, reaching the highest values in the series at the end of 2022. On the side of financing to MSMEs, the number of companies with financing experienced a significant increase in 2022, although credit balances fell in real terms.

During the second half of 2022, the BCRA and the National Government issued regulations that will contribute positively to financial inclusion. In the field of MSME financing, the extension of the Financing Line for Productive Investment of MSMEs was provided until September 2023. In connection with the initiatives to improve financing for MSMEs and with the aim of generating information on the use of digital products, the BCRA determined: (1) that unpaid MSME Electronic Credit Invoices (FCEM) be reflected in the Central Center for Electronic MSME Invoices Unpaid at Maturity (CenFIV), which seeks to provide information by generating a credit history in the use of this product¹¹; and (2) the creation of the “Registry of platforms for MSME financing” in which all legal entities that offer tools, computer systems and platforms for carrying out operations with MSME electronic credit invoices must be registered¹².

In terms of financing for households, the National Government included within the Ahora 12 Program, the purchase of nationally produced cell phones with financing of 10 installments and an APR of 48%. This measure has a positive impact on the use of digital financial services.

In order to protect depositors, the BCRA updated the upper limit of the coverage of the Deposit Guarantee Insurance System to $6 million per person, account and deposit in each EF. Fixed terms and balances in savings banks, among others, are covered by this coverage. In relation to savings, the Electronic Certificate for Time Deposits and Investments (CEDIP) was also created in order to expand the functionalities of time deposits and investments¹³. This new instrument will improve the liquidity of fixed terms since their ownership can be transferred by electronic means to cancel obligations, be traded on securities markets and be divided into amounts lower than the original amount. In this way, the average maturities of these placements could be extended, resulting in a greater availability of funds for longer-term loans by the EFSEs.

Finally, technological advances, the diversity of participants in the financial system and their interconnections, and the expansion of digital financial services, led the BCRA to update the standards on technology and information security risks with the aim of strengthening cybersecurity, fraud prevention and cyber resilience¹⁴, which are considered fundamental elements when it comes to adequately providing financial services to users^{Question 15}.

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1. Financial infrastructure

The post-COVID-19 pandemic stage poses new challenges for the infrastructure for access to financial services. On the one hand, the growing adoption of digital channels transforms digital infrastructure into an indispensable element for access to financial services. In this context, the physical infrastructure works in a complementary way with digital channels to continue offering services in person, either due to the nature of the service or the population that demands it.

In relation to the adult population, the physical infrastructure at the global level registers a decrease in traditional financial service access points (PDAs). Branches experience notable declines in high- and upper-middle-income countries, while ATMs show the greatest reduction in high-income countries. In both cases, the reduction in costs by financial institutions (EFSE) and the greater progress of the digitalization of financial services, particularly in the area of payments, are some of the explanatory factors of this new scenario¹⁶ .

Graph 1 | Evolution of branches and ATMs

Compared to the global trend and to upper-middle-income countries, branches in Argentina showed a very slight reduction and ATMs a significant increase (23% between December 2017 and 2021). In recent years, various regulations aimed to extend and modernize the ATM fleet¹⁷ and evaluate the impact on the coverage of branch closures prior to their implementation^18.

On the other hand, cell phone ownership and internet use in Argentina are at levels very close to the average of high-income countries¹⁹, while mobile coverage²⁰ almost reaches the entire population²¹. These values indicate that access to and use of information and communication technologies are widespread in our country, complying with one of the necessary conditions for access to and use of digital financial services. However, there are other factors, such as the quality of connection and the technological capabilities of the population, that must be considered to take advantage of and expand the potential of digital channels.

Graph 2 | Access to and use of information and communication technologies

Physical infrastructure. Physical access points to financial services (PDAs) registered an increase of 4.8% compared to December 2021 and maintained at 92.5% the percentage of the adult population living in localities with PDAs. Likewise, the level of PDA per 10,000 adults is similar to values in high-income countries such as Japan and Spain, although in these countries ATMs predominate and the contribution of complementary financial services agencies (ACSFs) is marginal, while in Argentina the latter have greater relative weight, as in other Latin American countries.

However, the pace of growth of ADPs slowed compared to the previous two years (13% for 2021 and 45% for 2020) due to a decline in the growth of ACSFs and ATMs. This behavior could be explained by:

1. 1. 1. (i) ACSF: these points rest mainly on existing extra-bank collection networks, where most of the service points are already enabled as ACSF. In 2022, the ACSF had a positive result with a 13% increase, although they registered a drop of 5.9% between June and December 2022²².

   (ii) ATMs: in general, the new equipment replaced existing units, generating a replacement of the device fleet, instead of an expansion. This replacement may have been prompted by the obligation for ATMs to offer biometric readers for user identification

²³

. ATMs slowed their growth from 4% in 2021 to 1% in 2022 in a context of greater use of electronic means of payment (EPM) and the expansion of alternative mechanisms for cash withdrawals.

Graph 3 | Financial Services Access Points

Likewise, the growth of payment accounts generated the need for an infrastructure that allows the holders of these accounts to make cash withdrawals and deposits. To do this, businesses that can be registered as ACSF and bank and non-bank ATMs are used. In this way, the physical infrastructure of financial services incorporates new use cases as interoperability between the different types of accounts and the application of technology is enhanced.

Finally, branches ended the year with a decrease of 1.5% compared to December 2021, cushioning the global trend ²⁴. These closures occurred in localities where there was at least one other branch and other PDAs, so their inhabitants still have human service points and electronic devices to access financial services.

Availability of infrastructure by locality. The physical infrastructure of the financial system provides services for the different types of accounts: EEFF account holders can use all types of PDAs, while people with payment accounts mainly use ATMs, both bank and non-bank, as a cash withdrawal point ²⁵. In this way, part of the physical infrastructure is shared by payment service provider (PSP) and EEFF customers, while another part is for the exclusive use of bank account holders. On the other hand, telecommunications infrastructure allows the use of digital financial services for both sets of users. In this context, the question arises as to whether the presence of infrastructure favors the possession and use of bank and payment accounts.

From the combination of availability of physical and telecommunications infrastructure, four subgroups of localities are obtained that present different configurations in terms of the possession of bank and payment accounts of their population. For the availability of physical infrastructure, those localities that have at least one branch and another type of PDA are counted, which implies that the locality has a full offer of face-to-face financial services²⁶. In terms of availability of digital infrastructure, the localities that report both fixed and mobile Internet connectivity are counted, which allows the use of electronic channels from the computer and cell phone.

Localities with a full offer of face-to-face financial services and internet connectivity concentrate 87% of the country’s adults and show very high levels of bank and payment account ownership. The population that lives in these localities presents very favorable initial conditions for access to financial services both in terms of account ownership and infrastructure. Likewise, these conditions favor the acceptance of electronic means of payment by local businesses and the exchange of funds between its inhabitants (positive synergies). Also, it is expected that the possession of payment accounts will grow in these localities attentive to the availability of internet connection.

On the other side of the spectrum, localities without full offer of face-to-face financial services and that did not report the two types of connectivity group a significant number of localities, although with smaller populations that together account for 2% of the total adult population. This infrastructure configuration presents more localities with a smaller proportion of their population with bank accounts and payment accounts.

Another aspect shown in the graph is the association between the existence of PDA coverage in the localities, regardless of whether or not they have internet connectivity, and the percentage of the adult population with a bank account. While the point cloud tends to be distributed with variability within the entire range of bank accounts (0% to 100%) when localities do not have PDA, this same ratio becomes concentrated in higher percentages above 80%) when localities have PDA. With regard to connectivity, it is observed that localities with a fixed and mobile Internet connection tend to register a higher percentage of the population with a payment account.

Figure 4 | PDA & Internet Coverage & Account Holding

Although there are several factors that can impact the holding of bank and payment accounts (such as the level of education and income, age, associated costs, among others), the availability of infrastructure is presented as a necessary condition for access to and use of financial services. Those localities that offer a more favorable physical and telecommunications infrastructure register greater account ownership.

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2. Account Holding

Account holding levels are approaching the total coverage of the adult population. The number of human persons (PH) who had at least one account stood at 35.1 million as of December 2022, which represented 99.3% of the adult population. With values above 95%, the NOA, Cuyo and Patagonia regions were at account holding levels close to full coverage while the Center and NEA have already reached it. This shows that widespread access to accounts is a federal phenomenon.

Table 1 | Bank and payment account holding metrics

Data as of December 2022

In terms of the number of accounts per adult, a metric commonly used internationally to compare account ownership between countries, Argentina has recorded continuous growth over the past 15 years, exceeding the average levels of high-income countries in recent years²⁷. A particular characteristic of the Argentine economy is the existence of bi-monetary savings banks (i.e., in pesos and in foreign currency), thus providing accounts in foreign currency with an additional margin (about 0.6 accounts per adult) in the explanation of the value achieved.

Since the beginning of the COVID-19 pandemic, bank accounts have grown significantly, although starting from a high level of coverage (2.4 accounts per adult²⁸), while payment accounts, being a more innovative product at that time, experienced a significant adherence in the adult population. This is reflected in the fact that more than half of the adult population simultaneously owns payment accounts and bank accounts.

The motivation to add a payment account (to the possession of bank accounts) usually lies in the use of specific services of this type of product such as e-commerce, the use of electronic means of payment offered by these accounts in stores and a simpler user experience for both opening and operating. Likewise, the distinctive feature of payment accounts is that they are opened and operated 100% digitally, from a computer or mobile device²⁹. This requires internet connectivity and certain technological capabilities of users, as it does not have its own physical service points.

Graph 5 | International comparison of the number of bank accounts per adult

Characteristics of bank and payment account holders. Prior to the COVID19 pandemic, joint account holding comprised 8.5% of the adult population. Then, given the need to carry out transactions remotely, PHs with both accounts experienced significant growth and, currently, are at values greater than or close to 50% of the adult population, both nationally and regionally. Given the relevance of this phenomenon, it is interesting to know some attributes of the people who make it up.

Age profile. The proportion of young people aged 20-29 and middle-aged 30-54) with joint tenure exceeds the proportion of people with only bank accounts. Conversely, in the very young (15-19 years) and older age (55 years or older) age ranges, the proportion of people who own both types of accounts is lower. While the holding of both types of accounts decreases as age increases, the levels of tenure are now high. Older people probably prefer to carry out financial transactions in environments where they feel comfortable and that eventually have the possibility of carrying out operations in person, an aspect that only bank accounts provide.

The latter is similar to the use of cell phones, computers and the internet, which is at high levels in all age ranges, but decreases as age increases. It is estimated that more than 90% of young and middle-aged people use the internet and mobile phones, while among people over 64 years of age only 59% use the internet and 74% use cell phones³⁰. Thus, the gap of elderly people who use their cell phones without connecting to the internet amounts to at least 15 p.p³¹. In this way, the technological factor plays a fundamental role in explaining the differences in account ownership between age groups since, in order to open a payment account and carry out operations, cell phones with an internet connection are required.

Table 2 | Persons with joint account holdings in relation to the adult population

When grouping the ages by five-year groups, three effects can be seen with respect to joint account keeping: (i) throughout the period of analysis, significant increases were recorded in all five-year groups. The changes experienced in the COVID-19 pandemic regarding interaction with financial services modified the habits of use of financial services of all population groups; (ii) people who are between 25 and 34 years of age have a clear preference for simultaneous possession of bank and payment accounts, as this would allow them to use the financial services of both accounts that are interoperable. Then, as age advances, the preference for joint account ownership is diluted and, from the age of 55, people prefer exclusive bank account ownership, although it is not as clear as it was years ago and iii) the evolution of the different age groups between December 2019 and the same month in 2022 was not uniform. The groups under 30 years of age grew in a similar way in 2020 and 2021; while the higher age groups tended to grow less during the first year of the pandemic and more in the following year³². Thus, the youngest were the ones who in relative terms adopted digital financial services the fastest.

Geographical profile. The growth of joint account tenure is a cross-cutting phenomenon for all localities, regardless of their population density. Although it became especially relevant in urban centers (greater than 50 thousand adult inhabitants), where the population with both accounts represented more than 50% of the PHs with accounts, localities with lower population density experienced significant increases, reaching participation levels between 30% and 40%. Thus, the percentage differences between urban centers and less populated localities narrowed over time.

Between December 2019 and 2022, the proportion of people with both accounts in localities with less than 10 thousand adults went from values close to 3.5% to values around 40%. Although the improvement in telecommunications infrastructure could have influenced this increase, this factor does not explain the differences between the localities with the highest and lowest population density, given that the availability of internet access in localities with less than 10 thousand adults is high³³.

Likewise, as mentioned in the Financial Infrastructure section, cell phone ownership, internet use and mobile coverage in Argentina are at very high levels, close to the total coverage of the population. In this sense, access to technology would be covered in both localities with low population density and those with high population density.

Graph 6 | Distribution of people with accounts according to the size of the locality

However, other factors associated with the locality, such as the quality of internet connection and the level of financial development, could influence the decision to open a payment account by its inhabitants. In the first case, localities with lower population density register average download speeds for fixed internet much lower than the most populated localities³⁴. On the other hand, when analyzing the situation of the less populated localities in terms of their financial development, it is observed that as population density falls, the localities register weaker development indicators³⁵. This could be linked to lower average incomes that make it difficult to pay for telecommunications services in line with digital financial services. Both aspects of localities discourage the use of digital financial services (and, therefore, the opening of a payment account), with people having as an alternative the use of financial services banking points such as branches or ATMs.

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3. Electronic means of payment and savings and investment modalities

3.1. Electronic means of payment

The use of electronic means of payment (EMP) contributes to improving financial inclusion. MEPs make it possible to channel the different payment needs of the population and, indirectly, can make access to new financial services, such as savings or financing products, affordable for their users³⁶. The BCRA, considering these aspects, has promoted through its regulation the creation of new means of payment, the adoption of technology, the reduction of commissions and the crediting times of funds for businesses.

Volumes and amounts transacted. In this context, the amounts of operations carried out through MPE increased their participation in the Gross Domestic Product (GDP), from 54% in 2021 to 66% in 2022³⁷. Individuals (PH) continued to increase the use of MPE³⁸ in the second half of 2022, particularly those whose commissions are zero or reduced and the availability of funds is immediate for the recipient (Transfers and Payments with Transfer -PCT-).

In 2022, the number of transactions per adult grew by 54% while the amount transacted per adult increased by 25% in real terms. Each individual made an average of 17.8 monthly payments for PEMs, which is a new record value and almost triple the pre-COVID-19 pandemic record³⁹. The downward trend in the average transaction, which fell by 19% in 2022, shows, in a context where the amounts operated per adult grew, the advance of digitalization in the daily payments of PHs since they usually involve relatively smaller amounts to face their daily transactions. This dynamism is also reflected in the growing relationship between PEMs and cash withdrawals. In 2022, $5.1 was recorded through MPE for every $1 of cash withdrawal, compared to a ratio of $3.5 to $1 in the previous year⁴⁰.

International comparison. At the international level, the global trend towards the digitization of payments, accelerated by the COVID-19 pandemic, is independent of the income level of countries, as both high- and middle-income economies increase their operations year after year in terms of population.

Figure 8 | International comparison of retail electronic payments

Argentina, in terms of population coverage of accounts (bank and/or payment), registered a level of annual PEM operations per adult below that of countries with similar coverage. This fact indicates that MEPs have room to continue growing at the local level, although significant variability is observed between countries with a high percentage of their population with accounts. On the other hand, there is also an outstanding performance in the growth of the use of PEMs in Argentina between 2017 and 2021 from an international comparison⁴¹.

High-income countries (including Australia and Korea, in the table in Figure 8) tended to expand their use of debit cards between 2017 and 2021, while upper-middle-income and low-income countries expanded through the use of transfers. In the case of the former, the growth in their use would be associated with contactless payments, while the development of instant or fast payments contributed to the increase in transfers⁴². Contactless card payments do not require cardholders to sign a receipt or enter a personal identification code at point-of-sale (POS) terminals, as long as the transaction does not exceed a certain value. In this way, it tends to simplify the operation and speed up its use. Instant payment systems can be used at any time of the day, the funds are immediately available to the beneficiary⁴³ and have lower costs than other means of payment.

Physical payment infrastructure. The expansion of the POS⁴⁴ and mPOS (mobile POS) terminal park continued during 2022. mPOS devices reached around 4.4 million devices, an all-time high in the series, with a year-on-year growth of 17%. For their part, POS terminals registered a monthly average of around 840,000 units during 2022, 5,000 more than last year. Although the total number of POS remains without significant changes since 2019, the active terminals indicator exhibited improvements, reaching an average of 60% in 2022, compared to values of 57%, 53%⁴⁵ and 58% in 2019, 2020 and 2021, respectively. The significant expansion of mPOS units could be explained by their low acquisition and maintenance costs as well as their ease of transport and use.

Card purchases show improvements in the intensity of use of POS terminals (both in amount and quantities per device). On the other hand, in mPOS operations, there is a small increase on the side of the number of operations per device and a reduction in the average amount⁴⁶. A structural aspect to highlight in the historical series of payments made by both terminals is that the average purchase in an mPOS terminal is systematically lower than the average value of a transaction per POS⁴⁷.

The devices in terms of the population, the number and the amount of operations channeled in each of them, allow us to infer the profile of the businesses or entrepreneurs that use each tool. mPOS, which have a greater relative reach, would be used by small merchants, arguably, less frequently than the use of a POS terminal. These merchants, given their smaller structure, could charge a substantial part of their sales in cash and channel some operations through these cheaper devices, which would explain the low rate of transactions per unit. Regardless, mPOS would meet the demand for electronic payments from users who previously might have operated entirely in cash at those merchants. On the other hand, the X-ray of operations in POS assumes that they would be larger businesses, which would channel a significant part of their sales through these devices.

Table 3 | Stock, quantity and amount of operations in POS and mPOS devices

Wire transfers. In 2022, each adult made an average of 5.4 transfers per month, more than double those made in 2021⁴⁸. The contribution of transfers initiated on mobile devices (originating from a payment account and those made via mobile banking) to the year-on-year variation in total transfers was very significant⁴⁹. Thus, 2 out of 3 total transfers per adult would have originated on mobile devices. This is reflected in the drop in transfers through ATMs in the last two years, a fact that suggests a replacement of this channel by the remaining⁵⁰.

In all transfers between financial institutions (EEFF) (CBU to CBU), mobile banking continued for the sixth consecutive year to register the highest year-on-year rates (3 digits in the last 3 years⁵¹). There is an upward trend in the amounts channeled through mobile devices, although only 39% of the total transfer amounts per adult were processed through these means in the period. This phenomenon would reflect the growing habit of people to carry out more and more daily operations through a cell phone for relatively low amounts. This goes hand in hand with the more intensive use of cell phones (88.1%) by the population⁵² and the increase in mobile banking to carry out transactional operations (See Section 1).

Figure 9 | Transfers per adult

Transfers from CBU to CBU via home banking continued with the highest concentration of amounts. In this way, when it comes to trading larger sums, individuals continue to prefer home banking. Unlike cell phones, personal computers are used by 42.3%⁵³ of the population. On the flip side, the reduced use of computers by individuals could pose a challenge in the face of the need to transfer larger sums.

On the other hand, the importance of having interoperable systems was reflected once again in the evolution of transfers between bank accounts and payment accounts. During 2022, the amounts per adult of “cross-transfers” practically tripled, a situation that was also verified in the amounts per adult, although in a more attenuated way.

Payments with transfers (PCT)⁵⁴. In 2022, each adult made an average of 3.5 monthly payments through PCT, registering an increase of 123% compared to the previous year, representing 2 out of 10 payments by electronic means per month. The amounts per adult grew by 63% at constant prices, while the greater intensity of use implied a reduction in the amount of the average operation at constant values (-27%). The evolution of these indicators suggests that the impetus for the increased use of PCT is explained by intra-PSP operations. These transactions are carried out between customers of the same payment service provider (PSP) with funds available in the payment accounts, initiated through the reading of a QR code or a payment button.

Table 4 | Transfer payments

The “interoperable ^PCTs”55 had a year-on-year growth of 64% in quantities per adult, mainly driven by operations initiated through the reading of QR codes, which accounted for 24 p.p. of the aforementioned variation. Transactions initiated via this technology registered a remarkable dynamic, multiplying by 10 and representing 16% of the total of “interoperable PCTs”. The amounts per adult via “interoperable PCTs” had a modest variation (+15%) and a drop in the average value of each transaction, thus showing their most widespread use for everyday transactions.

Intra-PSP PCTs continued to grow at high rates (a.i. rate 143%), although there is a slight slowdown. In this case, payments initiated through a payment button, associated with non-face-to-face e-commerce, accounted for 80% of the total. The amounts of PCTs within PSPs also registered a significant increase.

Figure 10 | Interoperable PCTs and intra PSPs

Debit card. In 2022, debit card payments continued their uninterrupted growth in terms of amounts per adult (+21%). Of the total monthly electronic payments, on average each individual made 1 out of 4 debit card transactions. The variations in the amounts per adult were more modest (+8%) with the consequent further fall in the average value of each operation (-10%). This reduction is registered in most MPEs and, as noted in the last IIF, this would show a greater penetration of the debit card in the daily payments of the population. In this sense, the participation of debit cards in supermarket sales increased 2 p.p. in 2022 compared to 2021. While in sales in wholesale self-service stores it grew by 1 p.p. in the average of the year 2022⁵⁶.

The growth in debit card payments was driven by transactions made through POS. The year 2022 closed with an increase in these payments (27.5%) higher than those channeled through the rest of the channels (mPOS, QR codes and remotes; 3%). In the case of amounts per adult, this behavior was even more pronounced given that there was a reduction in the amount per adult via mPOS, QR codes, and remote operations.

Figure 11 | Number of debit card transactions per adult

This breakdown, after two years of lower relative growth in payments made through POS compared to the remaining modalities, could be associated with the normalization of face-to-face activities. In particular, in general terms, there is a positive relationship between the evolution of operations with prepaid transport cards (proxy for the level of face-to-face activity) and payments with debit cards via POS devices. Thus, 76% of debit card payments were made in these units in 2022, 4 p.p. more than a year earlier. This behavior was not associated with a significant increase in the stock of POS devices since the variation in the average of the units that registered at least one operation in the month was equal to 4% during 2022 (see Physical payment infrastructure).

3.2. Savings and investment modalities

Individuals (PH) have the possibility of allocating their money among various savings and investment products, depending on their liquidity objectives, term and risk-return ratio⁵⁷. As of December 2022, considering the products offered by financial institutions (EEFF) and Payment Service Providers (PSPs), the savings and investment balance of PHs represented 8.7% of the Gross Domestic Product (GDP) in 2022. Over the last three years, immediate liquidity products (account balances and in Mutual Funds (DCFs)) maintained a relevant (but decreasing) share of total savings and investment balances. For its part, in December 2022, short- and medium-term products registered a 48.4% share of total savings and investment balances. This share is the second highest value since the beginning of the COVID-19 pandemic, which could be related to the will to maintain the purchasing power of the capital saved and invested.

In the last year (Dec-21 vs. Dec-22), a 0.6% reduction was observed in the real savings and investment balances of PHs, partly explained by a 10.2% drop in immediate liquidity balances. This drop was partially offset by a 12.3% year-on-year increase in short- and medium-term products. The variations recorded in each instrument operated in different directions. Balances in traditional fixed terms and in Purchasing Value Units (UVA) increased by 14.3% and 10% respectively, while balances in Mutual Funds (non-CDF FCIs) registered falls of 15.4%.

Figure 12 | PH savings and investment product balances

In terms of financial inclusion, it is relevant to investigate whether the increase in real balances in UVA, CDF, and traditional fixed-term products was accompanied by an increase in PHs’ use of savings and investment products. For this analysis, based on the statistical information available, traditional fixed terms and UVA without pre-cancellation option (hereinafter, “fixed terms”), and DCFs subscribed through payment accounts, are considered as a single set.

In December 2022, the number of PH fixed terms in force stood at 6.9 units per 100 bank accounts⁵⁸, reaching the highest point in the last 4 years. During 2022, the metric in question grew 53% due to a significant increase in the number of fixed terms close to 70%. The increase in the real monthly interest rate on fixed-term deposits towards positive values during the last four months of 2022 could be associated with the increase in their amount. As can be seen in Graph 13, the evolution of the metric shows a greater use of this savings product in terms of bank accounts, which could indicate a greater participation of PH in this product.

For its part, PH accounts in PSP with balances in FCD went from 3.7 million in December 2021 to 5.6 million in December 2022 (+36%). This growing adherence is reflected in the fact that 23.5% of payment accounts registered balances in DCF in December 2022. It should be noted that as of December 2022, the number of PHs with payment accounts reached a figure of 19 million PH, registering a net increase of 3.4 million, compared to the same month of the previous year.

Figure 13 | Human persons. Evolution of the number of fixed terms and CDFs in PSPs with respect to the account park

On the other hand, in relation to the PNFCs, the EEFF show a higher proportion of their debtors in localities with a greater number of inhabitants. This phenomenon is also replicated for the balance of financing, indicating a greater allocation of resources by the EEFF in larger localities⁶⁶. These localities have a greater presence of physical infrastructure, with which users can contract credit products not only digitally but also in person. The PNFCs, on the other hand, register a higher proportion of people with financing and debt balance in intermediate-sized localities, especially in the range of between 10 thousand and 50 thousand adult inhabitants. For both types of providers, this behavior deepens over time, both in the number of people with financing and in their corresponding balance.

Figure 20 | Debtors by age range and salary account holdings

4.2. Credit to productive units

Micro, small and medium-sized enterprises (MSMEs) are a fundamental asset of a country’s productive scheme. Their relevance lies both in the number of companies in the economy and in their contribution to employment⁶⁷ and, consequently, they are key actors in economic development. The availability of funds for these companies is, therefore, a transcendental factor in the purpose of financing production processes and investment in equipment^68,69. ^{In this sense, this section contributes to visualizing two external sources of the financing structure of MSMEs, the financing of financial institutions (EEFF) and non-financial credit providers (PNFC)70. The section inquires about the most used credit products and the age of MSMEs.}

In recent years, the BCRA has implemented different regulatory initiatives aimed at improving MSMEs’ access to EEFF financing, both to respond to the transitory impact caused by the COVID-19 pandemic and also of a more permanent nature to help reduce barriers to access to financing⁷¹. These include:

a. Incentives for reducing the cost of financing MSMEs through minimum cash reduction:

i. Based on the share of financing to MSMEs with respect to total financing to the non-financial private sector (NFPS).

ii. For credit to MSMEs without EEFF financing.

b. Financing Line for Productive Investment of MSMEs (LFIP). As of 2020, the EEFF must maintain a balance of financing included that is at least equivalent to 7.5% of their NFPS deposits in pesos subject to fractional reserves, whose interest rate is subject to a maximum ceiling.

In this framework, the number of MSME companies with financing in the expanded financial system (SFA) reached a number of 1.04 million as of December 2022, close to 63% of companies with MSME⁷² certificate. In this way, this group of firms registered a net increase of 215,542 units compared to December 2021. Micro companies contributed almost all of the 26% year-on-year increase. On the other hand, the financing balance of MSMEs in the SFA amounted in current values to $3.8 trillion in December 2022. At constant values, this balance fell by 14% in year-on-year terms⁷³, experiencing the same dynamics as credit to NFPS, which fell by 15% in that period⁷⁴.

Figure 21 | MSMEs with financing and economic activity

As previously indicated, the Financing Line for Productive Investment of MSMEs (LFIP) and the minimum cash reduction incentives for credit to MSMEs collaborate in directing financing to this group of companies at a cost lower than the market average⁷⁵. From its implementation in October 2020 to December 2022, the LFIP disbursed $4.2 billion, benefiting more than 371,280 companies⁷⁶.

On the other hand, with respect to the types of assistance most used by MSMEs since the COVID-19 pandemic, documents stand out, which includes both single-signature documents and discounted and purchased documents (hereinafter “documents”). Credit card assistance and title loans appear in second place. On the other hand, assistance associated with foreign trade and advances had contractions.

Figure 22 | Balance and interest rates per financing line

Different factors are associated with the behaviour of different types of assistance. On the one hand, the LFIP created favorable conditions for the existence of supply of certain lines of credit, such as, for example, document discounts. Likewise, the lower interest rate associated with the assistance of documents with respect to current account advances may have induced a greater use of the former⁷⁷. In the case of credit card financing, the abrupt reduction in the compensatory interest rate towards the first quarter of 2020, as well as the maximum limits to said rate based on a fixed rate⁷⁸ and the characteristic of being revolving loans could be associated with its outstanding performance. In 2022, some reduction was observed towards the last months of the year, while the rate for financing through this instrument showed an increasing trend in the second half of the year.

On the other hand, despite the consolidation of the recovery in economic activity, the financing levels of MSMEs registered in 2022, although they remained above pre-pandemic levels, are on a downward path. When disaggregated by company size, it can be seen that only small companies experienced a positive dynamic, more linked to the development of economic activity, while micro and medium-sized companies showed a reduction in the financing balance.

What SFA credit products do MSMEs use? The relevance of credit products, measured both in terms of balance and number of companies, varies depending on the size of MSME companies. The choice of the type of financing depends on a variety of factors, from the destination of the financing and the document requirements for the application to the interest rate, the amount of the financing and the repayment term. In terms of financial inclusion, the availability of a range of credit products that adapt to the diverse needs of MSMEs improves the growth possibilities of companies and facilitates the cycle of production of goods and/or provision of services.

In terms of balance, micro and small enterprises are financed mostly by credit cards and documents, while medium-sized enterprises are financed mainly by documents and advances⁷⁹. Therefore, the use of documents is the main financing mechanism for MSMEs, which consists of the delivery of their own documents or those of third parties as consideration for the loan granted by the EEFF. In the last 24 months, this credit product concentrated between 37% and 41% of the financing balance of MSMEs and represented a significant portion of the funds obtained that can be assimilated to working capital of small and medium-sized enterprises (68% to 78%). It should be noted that, among the destinations provided for by the LFIP, the application of funds to working capital is included, whose financing is instrumented, among other alternatives, through the mechanism of documents with a single signature⁸⁰.

In terms of the number of participating companies, credit cards maintain their relative share within each size, although their importance decreases as their size grows and, therefore, the participation of legal entities (PJs) increases. In addition, credit products such as advances, documents, and secured loans increase the share of firms as firms grow in size (i.e., PH share falls).

Table 5 | MSME Financing by Attendance Group and Size

Regarding financing by type of supplier, i.e. EEFF and PNFC⁸¹, MSMEs are mainly financed by the former, regardless of the size of the company⁸². On the other hand, it is observed that these companies are increasing their exposure to PNFC financing, although at levels much lower than those recorded by the EEFF⁸³. The emergence of new credit providers, leveraged on the use of technology for credit evaluation and management and on the use of equity and/or capital market financing, expanded the supply of credit for MSMEs.

In December 2019, the ratio of EEFF to PNFC financing was 50 to 1 (i.e., for every $1 of financing in PNFC, MSMEs had $50 in EEFF), while in December 2022, the ratio rose to 37 to 1. In this period, the balance of financing of MSME companies in PNFC increased by 50%⁸⁴. Likewise, during the period in question, the financing granted by the PNFCs was concentrated in smaller companies, while in the case of the LFES it was distributed more equitably, with a certain predominance of small and medium-sized TR-1 companies.

Figure 23 | MSME Financing Balance by Vendor Group and Size

How long do MSMEs with financing have?⁸⁵ The distribution of financing according to the life span of the productive unit is a relevant element for the financial inclusion of young MSMEs. On the one hand, young companies require an injection of resources in the early stages of development⁸⁶, but, on the other hand, they have less economic history of their company, which makes it difficult to evaluate their credit. At the same time, smaller firms, to the extent that they generate positive results (profits), tend to finance themselves through the reinvestment of profits, implying that they could substitute external sources of financing for internal ones⁸⁷.

In the case of PJ MSMEs, three-quarters of the productive units are up to 20 years old, with a predominance of micro and small sizes, and they account for less than 50% of the financing balance. Although young companies have a significant portion of the financing balance, the average balance is very low, which could be an indication that small companies use other sources of financing. Likewise, the passage of time seemed to have an impact on the level of financing of companies of all sizes, although the effect tends to be partially reversed for the group of companies with the longest life.

Figure 24 | Amount and balance of financing by type of person and length of life

Data as of December 2022

In the case of PH MSMEs, micro-sized companies predominate in all age groups. Also, as the age of the person increases, the participation of small companies grows, which could be linked to a certain trajectory of commercial activities. This can be seen in the fact that people over 50 years of age account for 50% of the financing balance and maintain average financing balances similar to or close to younger age groups.

Likewise, similar to what happens with PJ MSMEs, the growth in the age of people seems to affect the level of financing regardless of the size of the MSME. It should be noted that the number of medium-sized PH MSMEs is a very small portion of the total PH MSMEs (less than 1%), taking into account that the amount of turnover required for these sizes is very high for a commercial activity organized around a human person.

Figure 25 | Average current financing balance per lifetime

Data as of December 2022

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Section 1 / An approach to the use of electronic channels by financial institutions

In view of the significant progress made in digitalization, measuring the use of electronic channels is a crucial aspect of assessing the degree of (digital) financial inclusion. While aggregate variables such as electronic payments (see Section 3.1) show the growth of electronic channels, information is scarce on user behavior across electronic channels.

As a first approach to the subject, a survey was carried out on the use of electronic channels by individuals to carry out transactions that involve movements of funds. This survey consisted of a voluntary survey of all financial institutions (EEFF), which focused on collecting historical information on users and their activity in home banking (HB) and mobile banking or electronic banking wallet (MB or mobile banking)⁸⁸. The analysis proposed in this section considers a sample of 10 FBSEs, which accounted for 49% of bank account holdings in December 2021⁸⁹.

Figure A.1.1 | Using HB and MB to perform a transactional operation

In general terms, the use of mobile banking or electronic banking wallet to carry out transactional operations grew significantly. After the COVID-19 pandemic, a change in behavior is observed in the electronic channel chosen for transactions, losing home-banking relevance with respect to mobile banking.

The progressive inclination of account holders towards mobile banking is supported, among other factors, by a more intense use of mobile devices and the greater offer of banking applications with services and products that meet the different needs of individuals. Likewise, the cell phone has the potential to include new people in electronic channels, in particular population groups with a certain degree of vulnerability⁹⁰.

Results at the level of financial institution. Practically all the EEFF in the sample (9 out of 10) registered an increase in account holders who used mobile banking to carry out at least one transactional transaction between the last quarter of 2019 and the same period in 2021. These 9 EEFF accounted for 48% of the accounts in pesos in the financial system as of the last quarter of 2021.

Figure A.1.2 | Use of electronic channels to perform a transactional operation

Likewise, mobile banking became the main channel for a large part of the SEEs (7 out of 10 vs. 1 out of 10, in the last quarters of 2021 vs. 2019). On the user side, new digital behaviors are in line with a greater use of mobile banking: each person spent on average more than 3 hours per day on the cell phone during 2021 and it is estimated that downloads of mobile-banking applications and digital wallets and payments went from 5 million to 9.9 million in the period under analysis⁹¹.

For its part, the HB channel also recorded increases in its usage levels, but in a smaller amount of EEFF (5 out of 10) and with increases well below MB. In addition to what was previously mentioned about the increased use of mobile devices, the HB channel has certain characteristics that would limit the expansion of its use: (i) low ownership and use of computers, and (ii) the characteristics of the device that do not allow it to be used for certain operations (such as QR payments or other face-to-face electronic payments). On the other hand, certain behaviors of account holders would also limit the expansion of their use. The available information allows us to infer that account holders prefer to use the HB to make transfers of funds for higher amounts, which are made less frequently (See Section 3. Electronic means of payment).

Thus, the LFSE showed two behaviors: on the one hand, increases in MB use and simultaneously decreases in HB use (4 out of 10), and on the other hand, increases in the use of both channels (5 out of 10). This implies the incorporation of a significant number of new users to mobile banking, without this increase implying a significant loss of users in the HB.

Characteristics of the EEFF. As part of this process, certain attributes of the EFFS, such as the size of the EFFS and the age composition of account holders, could have boosted the adoption of mobile banking:

Figure A.1.3 | Account holding, MB use, and age structure

• Size of the EFS. This aspect, associated with the availability of resources, may have favored the creation or rapid adaptation of mobile banking applications and/or electronic banking wallets, which allowed the entry of new people to this channel in a short period of time. The 3 EEFF with the highest proportion of accounts in the financial system (SF) recorded the highest MB usage ratios in the last quarter of 2021.
• Age composition. Young people constitute the^92nd age group with the highest use of cell phones (95.9% in the fourth quarter of 2019 and 97.2% in the same period of 2021). The average turnout is 21%. In this way, the use of MB would have a lower limit stipulated by the weight of young people in the total number of clients of each PE. In most of the LFSE (7 out of 10 cases), the increase in the use of MB was accompanied by a higher participation of young people among their account holders.

Despite the improvement, the use of mobile banking only exceeded the ratio of 1 in 5 account holders in 3 of the EEFF surveyed, which indicates that the number of users could continue to grow.

In conclusion, the digitalization process that deepened as a result of the COVID-19 pandemic was reflected in an increase in the use of the electronic channels of the EEFF with a marked inclination of account holders towards the cell phone. The high use of mobile devices in all population groups, the advance of banking applications and the generational turnover in EEFF customers would be some of the factors that explain this phenomenon.

However, the latest data show that there is still room for the expansion of both electronic channels.

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Section 2 / Gender gaps in financing MSMEs

Micro, small and medium-sized enterprises (MSMEs) play a fundamental role in the growth of economies and the generation of employment. Globally, MSMEs represent 90% of companies and 50% of employment, while in emerging economies, they contribute 40% of GDP⁹³. MSMEs led by women represent approximately one-third of the global total number of MSMEs and are subject to additional challenges compared to their male peers. One of the challenges faced by women who manage MSMEs around the world is access to financing⁹⁴ . The financial constraints faced by women are associated with characteristics of the companies that operate, usually small, linked to the service sector or informal sectors. They may also face more expensive financing conditions since they are usually seen as less qualified than men⁹⁵.

The study of gender gaps in financing MSMEs poses a first challenge in terms of data availability to determine the set of productive units corresponding to men and women and what is meant by it. MSMEs can be constituted by natural persons (PH), whose owner defines the gender of the company, or legal persons (PJ). In the latter case, in order to discern whether they are companies with female leadership, a definition must be appealed to that generally uses one or both of the following criteria: (a) a certain shareholding composition in the hands of women; (b) a percentage of female participation in the board of directors. The Central Debtors’ Office (CENDEU) of the BCRA provides information on the MSME status of PHs and PJs that access financing in the financial system, as well as the gender of MSMEs constituted by PHs on which the analysis is focused.

Argentina made progress in the mapping of MSMEs led by women, made up of both PHs and PJs and with at least one employee. By 2020, it was estimated that 33% (about 180,000) of all MSMEs (541,000) had women in their leadership spaces (31% in the case of those constituted as PHs)⁹⁶. However, this set covers only MSMEs that had at least one registered employee. This condition prevents comparison with the information from CENDEU since the latter includes all productive units that report the status of MSMEs, whether they are employers or not⁹⁷. In this sense, this section will focus on the gender analysis with respect to access to financing by PH MSMEs and in terms of the average balance per company⁹⁸. The total number of women’s MSMEs PH with financing grew from 155 thousand in March 2019 to 323 thousand in December 2022, representing an increase of 108%. For its part, that of men went from 282 thousand to 542 thousand during the same period (92% increase).

From a first analysis, it emerges that the average balance of women’s MSMEs (MSMEs-M) is considerably lower than that of men’s MSMEs (MSMEs-H). As of December 2022, the average balance per MSME-M represented 47.6% of the average balance of an MSME-H, showing a gender gap in terms of the amount financed. This difference between companies of both genders remained at similar values during the last two years.

Size of the companies. A first explanation could be found in the size of the companies. The international literature indicates that financing is associated with the size of the firm and that firms led by women are, in general, smaller⁹⁹. There are several explanations for this, one of which is based on the time available to devote to their professional activities due, for example, to the greater dedication to care tasks.

Figure A.2.1 | Financing of PH MSMEs by gender

In the case of Argentina, in the last two years there has been a similar composition by size of MSMEs of men and women who access financing, with 86% of micro enterprises, around 13%/14% of small enterprises and less than 1% of medium-sized¹⁰⁰. The difference in average balance to the detriment of MSMEs-M is found in all sizes of companies and to a greater extent for larger ones. For small businesses as a whole, the average balance of women-owned businesses is about one-third of the average balance of men-owned businesses. Likewise, it is observed that men’s micro enterprises have a higher average balance than women’s small enterprises¹⁰¹, even though the turnover amounts for small companies is between 3 and 7 times higher than for micro¹⁰².

Figure A.2.2 | Average Balance by Size

Economic sector. A second hypothesis about the differential in the average balance is based on the branches of activity where a greater proportion of women-owned companies are concentrated. The international literature indicates that companies led by women operate relatively more in the services and trade sector, while those led by men operate in the industrial or manufacturing sector.

Table A.2.1 | Number of PH MSMEs with financing by size, sector and gender

Companies in the commercial or service sector tend to have fewer fixed assets that imply property titles (land, offices, production plants, etc.), which are the ones that financial institutions usually value positively when applying for guarantees. The guarantee is an important aspect to shape the risk profile of a company and evaluate the solvency of a loan, so it often also functions as a determining factor of access to credit or, at least, of the financing conditions.

Among PH MSMEs with financing, there is a greater concentration of women in the services and commerce sectors (88%) than men (76%), while in the industry and mining branch the opposite occurs (9% in the case of women and 13% for men), in line with what the literature suggests. And although differences persist in the average balance per company to the detriment of women, the gap in the case of industry and mining is smaller than that registered in the services sector (4 p.p. less) and commerce (8 p.p. less). This situation is replicated in each category by size of these sectors, although in different magnitudes, with the difference in the gap for micro enterprises being smaller.

Table A.2.2. | Average balance per women’s business / average balance per men’s business

The difference in financing balance between men’s and women’s companies could also respond to characteristics of MSMEs-M such as greater risk aversion. Evidence suggests, in general, that women are on average more risk-averse in their relationship with the financial system and that this is replicated in the business sphere¹⁰³. Greater risk aversion among women would reduce the demand for bank loans for women-led firms, since they opt for lower debt-to-equity ratios and thus use external financing to a lesser degree. Studies show that firms led by women have lower leverage than those of their male peers¹⁰⁴.

Although demand-side factors could explain the differences found in terms of average financing, there is room for supply to adapt to the differential characteristics of women’s MSMEs.

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Section 3 / Young people and financial inclusion: exploring the evidence of the impact of technology

The financial inclusion of young people contributes to their well-being. It gives them tools to manage their resources independently, allowing them to control their finances according to their needs and life stages (OECD, 2020¹⁰⁵). The objective of this section is to explore recent evidence on the financial inclusion of young people, focusing on two financial products, account ownership (bank and payment) and access to credit from both financial institutions (EEFF) and Non-Financial Credit Providers (NFCPs)¹⁰⁶.

A first aspect to consider is what is meant by young people. According to the United Nations definition, young people are those between the ages of 15 and 24¹⁰⁷. For its part, the Financial Inclusion Reports (FIRs) adopt a broader criterion and consider young people to be between 15 and 29 years of age. In any case, this section divides the adult population into 5-year-old age groups, allowing for a more flexible analysis of their financial inclusion. Young people represent a little more than 30% of the adult population¹⁰⁸, which shows their relevance in terms of the demand for financial services¹⁰⁹.

Technology plays a fundamental role in this process, given the conjunction of two trends. On the one hand, today’s young generations from an early age have experimented with electronic devices in a playful way. On the other hand, the financial services offering made significant progress facilitating its transactional operations through electronic devices, such as mobile banking and electronic wallets. For this reason, it is the younger age groups who gather the basic skills needed to adopt these services more quickly¹¹⁰.

The regulation, recognizing the benefits of financial inclusion for young people, contemplated the possibility that authorized minors can make use of the services of a savings bank^111. In recent years, the integration of new actors in the regulation of the financial system, mainly those providers of technology-based financial services, has made it possible to delve into its impact on financial inclusion¹¹².

Account holding. The number of people with bank and/or payment accounts went from 27.8 million in March 2019 to 35.4 million in December 2022, which represented a growth of 27%. The age group that contributed the most to this increase was 15 to 19 years old, with 6 p.p., while the next age group (20 to 24 years old) did so with almost 4 p.p. On the other hand, the age groups of 25 to 29 years old and 30 to 34 years old did so with contributions close to 3 p.p. each. Likewise, between 2019 and 2022, it was observed that the number of people who have both types of accounts (bank and payment) grew in almost all age groups, although for the first age range (15-19 years old) the three cases coexist in a more or less proportional way. Therefore, this fact could be indicating that in more recent periods the financial inclusion of very young people begins with one or the other account indistinctly.

Figure A.3.1 | Number of individuals based on their account holdings

In terms of age distribution within each type of provider, the customer portfolio of EEFF and PSP presents significant differences. In the case of the EEFFs, the distribution of their clients is relatively uniform in the age ranges between 20 and 44 years old and showed some bias towards the age group of young people in their growth between the beginning of 2019 and the end of 2022. For their part, PSPs currently have a more concentrated customer portfolio, especially in the 20 to 34 age ranges. In relative terms, in the case of PSPs, a younger age customer portfolio predominates compared to the case of EEFF (note that for the purpose of facilitating comparisons, the graphs maintain the same minimum and maximum values on the coordinate axis).

Likewise, empirical evidence suggests that the adoption by young people (15 to 24 years old) of PSP services was a later phenomenon in time compared to those between 25 and 39 years old. This point is observed in the change in the composition of payment account users between 2019 and 2022. In 2019, the 25 to 39 age groups outnumbered the 15 to 24 age groups. However, by the end of 2022, the two youngest age groups gained participation in relation to those aged 25 to 39.

Figure A.3.2 | Account distribution by age range

Access to financing. The comparison of the distributions of EEFF and PNFC customers between 2019 and 2022 shows that the differences between the user profiles of both groups were accentuated. While at the beginning of 2019 the NFPPs had, in relative terms of the FFS, a portfolio of users more oriented to the age groups active in terms of work¹¹³, the FFSPs showed a bias towards the older age groups.

Figure A.3.3 | Age distribution of PH with funding within each institutional group

In 2022, the curve representing the distribution of PNFC users showed gains in the participation of younger age groups to the detriment of older age groups. Among the factors that could explain this behavior are technology-based financial service providers (fintechs), in particular, those that offer payment and financing services. Access to a payment account usually functions as a gateway to other financial services¹¹⁴, such as access to investment products, credit, or insurance.

By way of summary, it is highlighted that between 2019 and 2022 there was a deepening in the financial inclusion of young people (15 to 24 years old). In terms of accounts, the available information suggests that the number of young people who open their first account through an EEFF or a PSP is similar. In the case of access to financing, significant changes were observed between EEFF and PNFC. A greater inclusion of young age ranges is noteworthy, mainly explained by the PNFCs (with the exception of the 15 to 19 age range, which includes people under the age required to take out a loan).

Methodological note

Population data

This IIF presents indicators that are disaggregated by different demographic and geographical variables. As of the date of publication of this edition, the final results of the 2022 National Census of Population, Households and Housing (CNPHV) have not been disseminated, so population data based on the 2010 CNPHV were used.

Given that the National Institute of Statistics and Census of the Argentine Republic (INDEC) does not publish a series that simultaneously contains all the disaggregations used throughout this IIF (gender, age group and geographical location at the provincial, departmental and locality levels), it was necessary to take different series according to the definition of each indicator:

– For the indicators at the national and provincial levels, the series entitled “Population by sex and five-year age groups for the country and provinces as a whole. Years 2010-2040”;

– For the departmental indicators, the series “Estimated population on 1 July of each calendar year by sex, by department” was used;

– finally, given that INDEC does not publish a projection of the evolution over time of the number of inhabitants of each locality, it was necessary to construct the series for the indicators at that level, for which the results of the CNPHV of 2010 were used.

Considering that there are differences between the provisional results of the CNPHV 2022 and those of 2010, the indicators developed in this IIF in relation to the adult population should be taken as provisional until updated information from the last census is available.

Finally, for the purposes of this IIF, an “adult” is considered to be a person 15 years of age or older, following the standard used by the World Bank for its financial inclusion indicators.

Regionalization

For the purpose of developing regional indicators, the regionalization criterion proposed by the Ministry of Economy and Public Finance (currently the Ministry of Economy) was used, which establishes five regions, namely:

– NOA (Northwest Argentina): Salta, Jujuy, Tucumán, Catamarca and Santiago del Estero.

– NEA (Northeast Argentina): Formosa, Chaco, Misiones and Corrientes.

– Nuevo Cuyo: Mendoza, San Juan, San Luis and La Rioja.

– Patagonia: La Pampa, Neuquén, Río Negro, Chubut, Santa Cruz and Tierra del Fuego.

– Centro and Buenos Aires: Córdoba, Santa Fe, Entre Ríos, Buenos Aires and the Autonomous City of Buenos Aires.

In this IIF, Nuevo Cuyo is mentioned as Cuyo and Centro and Buenos Aires as Centro.

Analysis of accounts by locality

To analyze the distribution of account and credit tenure of adults throughout the Argentine territory, each person was assigned a locality code according to the name of the locality, the postal code and the province reported in the AFIP Registry. This assignment coded the localities with 8 digits, while a 10-digit code was used for the population database. The 15 communes of CABA make up a single agglomerate, while 6 localities are agglomerated into 2. In this way, in this exercise a total of 3,520 localities are obtained, instead of the 3,538 that are used for the rest of the analyses.

The use of the projection of the adult population by locality as indicated in the Population Data section of this Methodological Note may generate a deviation in the estimation of the levels of account and credit tenure because the population projection by locality was made on the results of the 2010 National Census and the estimated growth rates may register differences with the actual rates.

Payment accounts at payment service providers

Among the Payment Service Providers (PSPs) that operate in COELSA, there are providers that are registered in the BCRA’s Registry of Payment Service Providers (PSP) and other providers that are not registered¹¹⁵. For the purposes of this report, only payment accounts for vendors that are registered as PSPs that offer payment accounts are counted.

MSME Business Credit

The MSME criterion proposed by the Ministry of Industry and Productive Development¹¹⁶ was used, in which an MSME is a micro, small or medium-sized enterprise, whose economic activity in the country is grouped in one of these sectors: services, commercial, industrial, agricultural, construction or mining. The size of the MSME is determined based on the economic activity and the amount of total annual sales (in some particular cases the number of employees or the level of assets is used). When the BCRA regulations so provide, the EEFF report in the Central Bank of Debtors of the Financial System (CENDEU) the field “código_pyme”¹¹⁷, which is composed of 2 digits, one indicating the size and the other the economic sector. Given that there are cases where the same company has different “código_pyme” assigned for the same period, the “código_pyme” corresponding to the credit assistance with the highest balance in each of the periods studied was used. There is a possibility that the first balance is identical to the second, in this case the highest possible “codigo_pyme” is taken.

For the assignment of the province to MSME companies, the tax domicile declared in the AFIP Registry was used.

Balances of savings and investment products of individuals (PH)

The savings and investment balances of the (PH) are classified as follows:

1. Immediate liquidity balances: include: (i) balances in current accounts and savings accounts denominated in local and foreign currency; (ii) balances in payment accounts and (iii) value of the net worth (PN) of the Mutual Funds (CDF) subscribed by PH (estimate).

2. Balances in short- and medium-term products: include: (i) balances in fixed terms in pesos and in foreign currency, (ii) balances of products in UVA and (iii) value of the NP of Mutual Funds that are not Mutual Funds (FCI non-CDF) subscribed by PH (estimate).

To estimate the PN of the DCFs subscribed by PH, the sum of the DCFs subscribed through PSPs, the exclusive DCFs of PHs in EEFF and, for those DCFs that may be constituted by both PH and PJ in EEFF, those corresponding to PH were estimated on the basis of weights. The weights were obtained through the calculation of the share of the PH FCIs in the Total FCIs (PH+PJ). Exclusivity was consulted through a survey of the websites and management regulations of the DCFs.

On the other hand, to estimate the NP of non-DCF CRFs, the difference between the NP value of the CRFs subscribed by PH (using the series called “FCIs opened by PH” published monthly by CAFCI) and the NP value of the DCF subscribed by PH was calculated.

Returns on savings and investment products

The following interest rates were used to calculate the returns:

– Fixed terms in pesos: minimum annual nominal interest rate (APR) defined by the BCRA (Website). The TNA was converted to its equivalent quarterly effective rate.

– Fixed terms in UVA with pre-cancellation option: variation in the value of the UVA 1 day prior to the expiration of the fixed term with respect to the value of the UVA 1 day prior to the constitution of the fixed term. A period of 90 days was taken in which the first day of the reference month corresponds to the date of constitution of the fixed term. To this rate was added the quarterly effective rate equivalent to the APR of 1%.

– DCF: monthly variation in the value of the shares of each DCF. With these values, a weighted average of the shares of all active DCFs was made. In this way, the average monthly yield of the CDF industry was obtained. The quarterly return for each period was estimated as the product of the compound monthly compounding of $1 during the 90 days following its incorporation and, from the value obtained, 1 was subtracted. Mathematically, the quarterly return on a 90-day investment in month “t” is equal to (1+Rt) x (1+Rt+1) x (1+Rt+2) – 1, where Rt is the return between month “t” and month “t+1”.

Use of financial institutions’ electronic channels

In July 2022, the BCRA conducted a voluntary survey of all financial institutions (EEFF), distributed through the associations that bring them together. The survey focused on collecting information on users of the channels: home banking (HB), mobile banking or electronic banking wallet (MB) and both channels (CE). Information was requested for the period between the last quarters of 2019 and 2021.

The survey was structured in three sections for each channel: (a) customer registration, (b) customer access, and (c) customer transactional operations. In the latter case, the metric contemplates the number of PH holders -unique- of any type of bank account in Argentine pesos who used this electronic channel to initiate at least one transactional operation in the quarter. Transactional transactions are those that involve the movement of funds originated by one of the account holders (e.g., paying for a service, sending money, etc.).

Responses were obtained from 16 EFSEs. The final sample was reduced to 10 EEFF (6 private and 4 public banks) for two reasons: (i) lack of some data and (ii) difficulty in disaggregating the metrics requested by different channels. Thus, the information used for the section includes: (1) 10 EEFFs, (2) transactional transactions and (3) the HB and MB channels individually. Finally, the HB and MB usage ratios were constructed from the data on transactional transactions and the number of PH account holders in each EF.

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Glossary of abbreviations and acronyms

ACSF Complementary Financial Services Agency

AFI Alliance for Financial Inclusion

AFIP Federal Administration of Public Revenues

ARS Argentine Peso

ATM ATM

BCRA Central Bank of the Argentine Republic

BIS Bank for International Settlements

CABA Autonomous City of Buenos Aires

CAFCI Argentine Chamber of Mutual Funds

CBU Uniform Bank Code

CEDIP Electronic Certificate for Time Deposits and Investments

CENDEU Central Bank of Debtors of the Financial System

CenFIV MSME Electronic Invoices Center

NVC National Securities Commission

COELSA Electronic Clearing House

CPMI Committee on Payments and Market Infrastructures

EEFF Financial Institutions

EF Financial Institution

EMAE Monthly Estimator of Economic Activity

ENACOM National Communications Entity

EPH Permanent Household Survey

ETCNB Non-Bank Credit Card Issuers

FAS Financial Access Survey

CDF Direct Pool Fund

FCD-PH Pool of Money of Human Persons

FCEM Electronic Credit Invoices for MSMEs

FCI Mutual Fund

FCI-PH Common Investment Fund for Individuals

FF Financial Trust

IMF International Monetary Fund

FSB Financial Stability Board

HB Home banking

INBpc Gross national income per capita

INDEC National Institute of Statistics and Censuses

CPI Consumer Price Index

ITU International Telecommunication Union

LFIP Financing Line for Productive Investment

MB Mobile Banking

Billion Millions

MSMEs Micro, Small and Medium Enterprises.

MSME-H Micro, small and medium-sized enterprises owned by men

MSME-M Micro, small and medium-sized enterprises of women

MSMEs PH Micro, small and medium-sized enterprises of individuals

MSMEs PJ Micro, small and medium-sized enterprises of legal entities

MPE Electronic Payment Methods

MPOS Mobile Device at Point of Sale

NEA Northeast Argentina

NOA Northwest Argentina

ON Negotiable obligation

OPNFC Other Non-Financial Credit Providers

PCT Transfer payments

PDA Access Points

FAQ Fixed Term

PH Human Person

GDP Gross Domestic Product

PJ Legal Entity

PN Net Worth

PNFC Non-Financial Credit Providers

POB Population

POS Point of Sale Device

PSP Payment Service Providers

QR Quick Response code

RI-DSF Information Regime for Debtors of the Financial System

SEPyME Secretariat for Small and Medium Enterprises and Entrepreneurs

Shadow Fiend Financial system

SFA Expanded Financial System

SIPA Argentine Integrated Pension System

SISCEN Centralized Information Requirements System

NFPS Non-Financial Private Sector

T Trimester

TAS Self-service terminal

TD Debit Card

ICT Information and Communication Technology

TNA Annual Nominal Rate

UVA Purchasing Value Units

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References

¹ EMAE, seasonally adjusted variation.

² INDEC, Quarterly series of global supply and demand. Years 2004-2022.

³ INDEC, Labor Market. Socioeconomic rates and indicators (EPH). First quarter 2017 to fourth quarter of 2022 and Ministry of Labor, Labor Statistics Bulletin, Labor Market.

⁴ Indec. Wage index.

⁵ BCRA, Credit Conditions Survey (third and fourth quarters of 2022).

⁶ INDEC. Internet access. Third quarter of 2022.

⁷ World Bank. International Telecommunication Union, World Telecommunication/ICT Development Report and database.

⁸ UTI. ICT prices. The prices of “Fixed-broadband basket (5GB)” and “Data-only mobile-broadband basket (2GB)” for the year 2021 were taken with respect to the gross national income (GNI) per capita (Year 2021, latest available information). While for Bolivia the cost of fixed broadband represented 8.9% of the GNI, in Argentina, 4.8% and in the United States 1%. In the case of mobile broadband, costs fell by 1.4% in Argentina, 1.9% in Colombia and 0.7% in the United States. It should be clarified that the results presented for the year 2021 are maintained in qualitative terms for the years 2019 and 2020. The sample of Latin American countries is made up of Bolivia, Paraguay, Ecuador, Colombia, Peru, Mexico, Uruguay, Brazil and Chile.

⁹ Data.ia Intelligence.

¹⁰ Ibid.

¹¹ BCRA, news of 01.11.2022.

¹² Communication A 7673.

¹³ News. Communication A 7672.

¹⁴ According to the Financial Stability Board (FSB), cyber resilience is defined as “The ability of an organization to continue to carry out its mission by anticipating and adapting to cyber threats and other relevant changes in the environment and by resisting, containing, and recovering quickly from cyber incidents” (Cyber Lexicon, FSB, 2018).

¹⁵ BCRA, news of 09.03.2023 and Communication A 7724.

¹⁶ Financial Access Survey, 2022 Trends and Developments.

¹⁷ Communication A 7208 established the requirement for biometric readers for ATMs. Communication A 7254 established incentives for the improvement of the distribution and operability of EEFF ATMs.

¹⁸ T.O. of Expansion of financial institutions. Section 11, transitional provisions. Since October 2020, the EEFF must require the prior approval of the BCRA to proceed with the closure of branches.

¹⁹ A 2022, Argentina: 88% cell phone ownership and 87% internet use; High-income countries: 95% and 92%, respectively

²⁰ The definition of “Mobile Coverage” can be found in the note in Graph 2.

²¹ Data from EPH, INDEC and the United Nations International Telecommunication Union.

²² Communication A 7566 limited the operations that financial institutions may delegate to ACSFs to cash deposits and withdrawals; payments and collections; and the payment of social security benefits. This change in delegated operations took effect as of November 2022, which may have affected the number of ACSFs enabled.

²³ Communication A 7208 established the requirement for biometric readers for ATMs.

²⁴ Between 2017 and 2021, Argentina registered a 5.5% reduction in its number of branches per 10,000 adults. 77% of high-, upper-middle-income and lower-middle-income countries that report in FAS have a drop in branches, reaching an average reduction of 16% for the same period. For upper-middle-income countries, the reduction occurs in 85% of the group and reaches an average value of -12%.

²⁵ PSPs offer their customers several types of points and different schemes for withdrawing and depositing cash that may involve costs for users. Among the options offered, there is the use of bank and non-bank ATMs, extra-bank collection networks (which share infrastructure with ACSFs) and other affiliated businesses.

²⁶ See Table 2, Financial Inclusion Report, first half of 2022.

²⁷ Two clarifications: (i) Among high-income countries, there is significant variability in the indicator of account tenure in the adult population. While Sweden had around 4.6 accounts per adult in 2021, the same indicator was 0.8 for Italy; (ii) A greater number of financial institutions in the country compared to those existing in high-income countries could be associated with an increase in this indicator above that observed in high-income countries. Taking advantage of different credit conditions or investments in one or another financial institution could induce people to open accounts in more than one financial institution. However, countries such as Spain, France, the United Kingdom or the United States have a higher list of commercial banks than Argentina (see IMF, Financial Access Survey for the year 2021).

²⁸ Value as of March 2020.

²⁹ As mentioned in the Financial Infrastructure section, payment accounts allow cash to be withdrawn and deposited at shops and non-bank withdrawal points, although it is also possible to do so by card at any ATM (bank or non-bank).

³⁰ In the fourth quarter of 2021, the use of the internet and cell phones for people between 18 and 29 years of age reached 95% and 97.2% respectively, for people between 30 and 64 years of age these values were 91.8% and 96.2%. On the other hand, for people over 64 years of age, the use of the internet and cell phones was 59.1% and 74.7%. See Report on Access and Use of Information and Communication Technologies. EPH. Fourth quarter of 2021. INDEC.

³¹ People can connect to the internet not only through cell phones, but also from their computers, laptops and tablets, so this gap could be greater than 15 p.p.

³² The analysis of the temporal evolution of a complete set of age ranges implies the existence of a certain dependence between the indicators of two sets of contiguous age ranges. For example, individuals who in a particular year belong to an age group (e.g., “n”) in the following years may become part of the next age group (“n+1”), with the older age ranges tending to reflect what happened in the lower age ranges.

³³ Table 1 | PDA and connectivity by province. Financial Inclusion Report, first half of 2022 and Graph 3 | PDA coverage and connectivity in localities of less than 10 thousand adults. Financial Inclusion Report, first half of 2021.

³⁴ Fixed Internet accesses by download speed and location, ENACOM.

³⁵ Each of these categories is associated with specific economic and financial development indices, ordered in descending order. Category 1 includes those localities with the best economic and financial indices in the country and category 6 includes the localities with the lowest relative values. Categorisation of localities for financial institutions. See methodological note for more details.

³⁶ See, for example, “Payment aspects of financial inclusion in the fintech era” (BIS and World Bank, 2020)

³⁷ The ratio is calculated as the sum of the current amounts of monthly operations with MPE during the year 2022 over GDP at current prices for that year.

³⁸ The amounts mentioned in the section are expressed at constant prices of January 2019 (INDEC CPI January 2019 = 100).

³⁹ The progress made in data collection in recent months made it possible to incorporate the following operations: (1) intra-PSP transfers: immediate transfers where the payer’s payment account and the receiving payment account are located within the same PSP; (2) Payments with transfers (PCT) intra PSP (within the heading “PCT”): payments that are made between customers of the same PSP with funds available in the payment accounts, initiated via the web or through the reading of a QR code; (3) Direct debits: Businesses can collect their invoices through debit transactions on their customers’ bank accounts; (4) Immediate debit (DEBIN): it is an online transfer mechanism in which the person who collects initiates the process and the person who pays only has to accept it.

⁴⁰ According to Khiaonarong and Humphrey (2022), the value of cash withdrawals is an approximate indicator of the use of cash as a means of payment.

⁴¹ For this exercise, 19 countries were taken that, between 2017 and 2021, reported the average number of operations with MPE per inhabitant (BIS, Payments and financial market infrastructures). In general, all countries exhibited annual growth in the use of PEM, with the exception of 5 countries during the pandemic year (2020). Argentina ranks third in terms of growth in the use of MPE between 2017 and 2021, below Saudi Arabia and India.

⁴² BIS (2023). Digital payments make gains but cash remains, CPMI Brief No 1.

⁴³ Ibid.

⁴⁴ They correspond to those reported by Prisma and Fiserv.

⁴⁵ As a result of the restrictions on mobility during the months of April and May 2020.

⁴⁶ Debit card payments at POS and all card payments at mPOS.

⁴⁷ In 2022, the average value of a POS transaction was on average 40% higher than that of mPOS.

⁴⁸ This value incorporates the transfers within each PSP to the series analyzed in the previous IIFs and, depending on the availability of data, does not include those made within each financial institution, so the total value is underestimated.

⁴⁹ 90.6 p.p. of 122.2%. This number may be underestimated by the lack of disaggregated information on the channels used in transfers from a bank account to a payment account.

⁵⁰ The addition of new accounts to send a transfer requires relatively strong security measures in order to minimize fraud. ATMs, by complying with these measures, were historically the appropriate channels to initiate a first transfer. More recently, with the application of two-factor authentication (such as tokens) and e-wallets, the use of ATMs could have been replaced by mobile banking (MB) or home banking (HB).

⁵¹ 2020: 178%, 2021: 123% and 2022: 131%.

⁵² Population aged 4 years and over, total 31 urban agglomerations. INDEC. Access to and use of information and communication technologies. EPH. Fourth quarter of 2021.

⁵³ Ibid.

⁵⁴ PCTs are instant transfers used to make a payment for the acquisition of a good and/or service with the participation of an acceptor. The acceptor offers merchants the tools to charge with this means of payment. PCTs have different commercial rules from the rest of the immediate transfers (Retail Payments Report, BCRA).

⁵⁵ Interoperable PCTs are carried out between different PSPs/EEFF and include those initiated in interoperable QRs, in POS with card credentials, with random keys and payment button.

⁵⁶ INDEC, National Survey of Purchasing Centers and Survey of Supermarkets and Wholesale Self-Services.

⁵⁷ The amounts mentioned throughout the section are expressed at constant prices of January 2019 (Indec CPI January 2019 = 100).

⁵⁸ Only accounts in pesos are considered.

⁵⁹ The APR (nominal annual interest rate) went from 37% at the beginning of the year to 75% at the end of the year. See Regulatory Annexes of the Financial Inclusion Report, second half of 2021 and the Financial Inclusion Report, first half of 2022.

⁶⁰ The yield on fixed-term deposits in pesos is determined by the Quarterly Effective Rate.

⁶¹ DCFs can be rescued immediately or within 24 hours, depending on the fund.

⁶² The amounts mentioned in the section are expressed at constant prices of January 2019 (CPI INDEC January 2019 = 100). The amounts mentioned in the section are expressed at constant prices of January 2019 (IPC INDEC January 2019 = 100).

⁶³ Financial Inclusion Report, first half of 2022.

⁶⁴ It is assumed that people aged 65 and over receive retirement benefits.

⁶⁵ People 65 years of age or older.

⁶⁶ The size of the locality is considered based on its number of inhabitants.

⁶⁷ According to the Social Security Report (AFIP, 2022), between January and November 2022, the average number of employers reached around 526,000 companies. Of this total, 98% of employers had between 1 and 100 employees. On the other hand, the number of employees working in companies with up to 100 employees represented 41% of the average of just over 8 million employees reported in the Argentine Integrated Pension System (SIPA). Although these numbers refer to a subset of the total number of people employed in the country, due to their magnitude and because they correspond to formal employment, they allow us to visualize the relevance of this set of companies.

⁶⁸ Various studies have investigated the financing structure that companies choose to finance themselves, depending on whether it is for working capital or fixed assets, the economic sector or size of the company (see, for example, Villar, L. (2020) Financing Structure of Companies in Argentina: Influence of the Size of the Firm and the Sector to which it Belongs, LV Meeting of the AAEP). Among the conclusions of this work (carried out based on a sample of 991 cases for Argentina from the World Bank’s Enterprise Surveys (2017-18) it is pointed out that undistributed profits constitute the main source of financing for companies (including those of large size), while to finance working capital are loans from suppliers and/or advances from customers and, on the other hand, the financing of fixed assets is through EEFF credits.

⁶⁹ In general terms, the sources of financing are divided into: (i) internal: undistributed profits; and (ii) external: supplier loans, customer advances, bond and equity issuance, debt with EEFF and PNFC.

⁷⁰ MSMEs that have exclusive financing from non-financial credit providers (PNFCs) are not included. In other words, MSME companies with financing in the SFA are composed of those that have financing exclusively from financial institutions (EEFF) and those that have financing from both EEFF and PNFC.

⁷¹ In Argentina, 21% of small companies (5 to 19 employees) and 43% of medium-sized companies (20 to 99) used bank credit to finance working capital, while the indicator rose to 54% in the case of large companies (+100). As for bank credit in general, 35%, 53% and 64% of small, medium and large companies, respectively, used it. Despite these indicators, a striking aspect of the responses is that 47% of small firms stated that they did not need loans, compared to 31% of medium-sized firms and 28% of large firms. Enterprise Surveys, World Bank, 2017 (991 companies surveyed).

⁷² Latest available data: December 2021, 1,633,341 MSME companies. Secretariat of Small and Medium Enterprises and Entrepreneurs (SEPYME), Argentina.gob.ar. The jumps in the total number of MSMEs in May 2020 and 2022 could be linked, among other reasons, to: (i) the process of assigning new certificates and/or (ii) the timing of MSMEs requesting MSMEs from MSMEs information about their MSME status.

⁷³ The amounts mentioned in the section are expressed at constant prices of January 2019 (INDEC CPI January 2019 = 100).

⁷⁴ BCRA – NFPS Loans and Deposits. Consider NFPS financing with EEFF.

⁷⁵ T.O. Financing Line for Productive Investment of MSMEs and Minimum Cash T.O. (Point 1.5.4).

⁷⁶ Report on banks. December 2022.

⁷⁷ The lower interest rate on documents compared to current account advances could be due to at least two factors. On the one hand, the average terms operated by document discounts are lower than those of current account advances (61 days vs. 95 days). On the other hand, while in current account advances the policyholder is the MSME itself, in the case of discounted documents it may belong to a larger company, with a better credit rating, thus reducing the risk of uncollectibility and, consequently, its discount is at a lower rate than what could be obtained for a current account advance.

⁷⁸ Prior to 2020, compensatory interest also had a maximum limit but based on the interest rates that the FI applied to personal loans without collateral. As of February 2020, the interest rate begins to be regulated from a fixed nominal value (see latest versions of the T.O. on Interest Rates in Credit Operations, point 2.1.1).

⁷⁹ Micro and small companies have a majority participation in PH, which is why it contains financing associated with the personal consumption of entrepreneurs that cannot be distinguished from productive financing. For this reason, “Credit Card” assistance is of significant importance.

⁸⁰ Taking the average quarterly balances of the years 2020 and 2022, the largest increase in absolute values and at constant prices corresponds to this type of assistance, followed by collateral loans. The growth of both lines occurred in a context where the total average balances in 2022 are lower than those of 2020 and 2021.

⁸¹ The PNFCs offer MSMEs mainly personal loans and credit card assistance, while the EEFF have a wider range of credit products. PNFC assistance is characterized by short deadlines and relatively low amounts.

⁸² PNFCs mainly offer MSMEs personal loans and credit card assistance, while EEFFs have a wider range of credit products. PNFC assistance is characterized by short deadlines and relatively low amounts.

⁸³ Between December 2019 and December 2022, PNFC financing represented between 1.6% and 2.7% of the total balance of financing to MSMEs.

⁸⁴ See Footnotes 68 and 69.

⁸⁵ For MSMEs incorporated as PJs, the life span is determined by the beginning of the commercial activity (date of incorporation of the company), while in the case of PHs, it is determined by the date of birth of the person. In the latter case, the analysis is linked to the age of the person and not to the length of time they have been engaged in the commercial activity.

⁸⁶ Companies with the MSME category must comply with certain administrative formalities, which indicates that the projects have a certain path prior to obtaining financing from the SFA.

⁸⁷ Villar, L. (2020) points out that undistributed profits are the main source of financing for companies (including large ones), while to finance working capital are supplier loans and/or customer advances and for fixed assets EEFF credits.

⁸⁸ The survey was sent in mid-2022 and requested information for the period between the last quarter of 2019 and 2021. Responses were received from 16 EEFF (Banco Itaú Argentina, Banco de la Provincia de Buenos Aires, Banco de Corrientes, Banco Santander Río, Banco de Formosa, Banco Patagonia, Industrial and Commercial Bank of China, Banco de la Ciudad de Buenos Aires, Banco de la Nación Argentina, Banco Credicoop, Banco Macro, Banco Industrial, Banco de la Provincia de Córdoba, Banco Hipotecario, Banco Comafi and Banco Galicia). The final sample was reduced to 10 EEFF (6 private and 4 public banks) for two reasons: (i) lack of some data and (ii) difficulty in disaggregating the metrics requested by different channels.

⁸⁹ For more details of the survey and its methodology, see the Methodological Note.

⁹⁰ Only 42.3% of the population used the computer in the fourth quarter of 2021 compared to 88.1% who used a cell phone. This difference of 45.8 p.p., somewhat lower in 2019, deepens to the detriment of older people (65 years and older) and those who, aged 18 and over, reached an educational level equal to or less than incomplete secondary school – including people without education (INDEC. Information and communication technologies).

⁹¹ Data.ia Intelligence. State of Mobile 2023.

⁹² The definition of young people used by INDEC (18 to 29 years old) differs slightly from that used by the BCRA: 15 to 29 years old.

⁹³ Small and Medium Enterprises (SMEs) Finance, World Bank.

⁹⁴ According to the Enterprise Surveys (World Bank, 2017), for those companies whose senior managers were women, about 15% of these companies had bank financing for working capital, compared to 31% of cases of companies led by men. Likewise, in the case of those led by women, 76% of the cases used internal sources of financing to finance the investment compared to 60% of cases of companies led by men.

⁹⁵ AFI, 2022. Policy catalogue: women-led MSME access to financing and International Finance Corporation, 2014. Woman Owned SMEs: A Business Opportunity for Financial Institutions.

⁹⁶ Rojo, S.; Benítez, N.; Schteingart, D.; and Laham, S. (March 2022). MSMEs led by women. Network Research Series, document N° 3. Center for Studies for Production XXI, Secretariat of Small and Medium Enterprises and Entrepreneurs, Gender Cabinet – Ministry of Productive Development of the Nation.

⁹⁷ As of December 2022, 1 million MSMEs with financing were reported, of which 865 thousand were constituted as PHs and, of this last amount, 323 thousand were owned by a woman.

⁹⁸ The amounts mentioned throughout this section are expressed at constant prices of January 2019 (INDEC CPI January 2019 = 100).

⁹⁹ Klapper, L. F. and S. Parker. 2010. Gender and the business environment for new firm creation. Bardasi, E., S. Sabarwal and K. Terrell. 2009. How do female entrepreneurs perform? Evidence from three developing regions .

¹⁰⁰ For medium-sized enterprises, the low number of firms with financing could compromise the representativeness of the average balance per firm. Consequently, they are not shown in gap analyses by size and economic sector.

¹⁰¹ As of December 2022, the balance of financing for women’s small businesses amounted to 919 thousand current pesos vs. 1.1 million pesos for men’s micro enterprises.

¹⁰² Resolution 220/2019 and Resolution 23/2022 and Resolution 121/2023. The size of MSMEs is determined based on economic activity and the amount of total annual sales and, in some particular cases, the number of employed personnel or the level of assets expressed in pesos is used.

¹⁰³ Breuer, W., M. Riesener and A. J. Salzmann. 2014. Risk Aversion vs. Individualism: What Drives Risk Taking in Household Finance?

¹⁰⁴ Faccio M., M. T. Marchica, R. Mura. 2016. CEO gender, corporate risk-taking, and the efficiency of capital allocation.

¹⁰⁵ OECD (2020), Advancing the Digital Financial Inclusion of Youth.

¹⁰⁶ The study focuses on these two products because they are those where information is available to quantify their access by young people.

¹⁰⁷ See United Nations.

¹⁰⁸ Population aged 15 years or older.

¹⁰⁹ National Census of Population, Households and Housing 2010, INDEC.

¹¹⁰ An analysis of young people’s adoption of digital financial services can be found in OECD (2020), Advancing the Digital Financial Inclusion of Youth.

¹¹¹ Communication A 6103.

¹¹² In March 2020, the Information Regime for Payment Service Providers (Com. A 6929) was established, while in October of that year the scope of the regulation of Other Non-Financial Credit Providers was extended, implying, among other aspects, the obligation to register and report their portfolio of debtors, whether the offer of credit is made in person and/or through means electronic or remote.

¹¹³ According to labor statistics, while the employment rate was between 75% and 83% for people aged 25 to 59, it drops to 24% for those aged 59 and over and 42% for those aged 18 to 24 (Ministry of Labor, BEL, data for the third quarter of 2022).

¹¹⁴ See, for example, BIS (2020). Payment aspects of financial inclusion in the fintech era.

¹¹⁵ TO Payment Service Providers.

¹¹⁶ What is an MSME?

¹¹⁷ Determination of the conditions of MSMEs. Point 1, BCRA.