Instant Payments, Financial Inclusion, and Access to Credit: Evidence from the Adoption of Pix in Brazil

Abstract

In November 2020, the Brazilian Central Bank launched Pix, a public instant payment system enabling instant transfers between accounts at any time. After its introduction in late 2020, Pix quickly became the most popular payment method in Brazil and has been cited as a successful tool for increased financial inclusion. In this paper, I empirically evaluate the effect of Pix on a crucial dimension of financial inclusion: access to credit. I take advantage of the immediate region level variation in Pix adoption to investigate the causal relationship between the introduction of Pix and the growth in access to credit, as measured by loans extended by Brazilian banks to individuals. I use granular Brazilian government data aggregated at the immediate region level on Pix transactions, bank balance sheets, and economic and demographic indicators to evaluate the effect of this policy. Using a difference-in-differences methodology with continuous treatment and time and region fixed-effects, I find that a 1% increase in Pix transactions per person over 15 resulted in a 0.14% increase in access to credit in the period after the tool's launch, significant at the 99% confidence level. Results are robust to alternative specifications, including a binary variable treatment. The effect of Pix on credit is particularly important in regions with intermediate density, income, and development prior to the introduction of the system. This paper adds to the literature on Pix and public instant payment systems more broadly by analyzing the effect of Pix on an indicator not previously empirically researched and highlighting its heterogeneous impacts.