Financial inclusion and roof quality: Satellite evidence from Chilean slums

Abstract

Although not all residents of slums are necessarily poor, and conversely, not all low-income individuals live in slums, housing precarity is a distinctive feature of these communities. This paper examines the relationship between financial inclusion and roof quality improvements for individuals living in slum settlements in Chile. We use satellite images to measure the quality of dwelling roofs as well as the CajaVecina initiative to measure the level of financial inclusion of the families that live there. Our results reveal that a higher level of financial inclusion results in an expanded presence of permanent-material roofs within slums. Moreover, we provide evidence that financial inclusion encourages self-employment activities among low-income individuals which is evidence of a transmission channel for the effect studied.