Impacts of financial inclusion on micro-businesses: Factors explaining business growth

Access to financial markets, digitization, and for mality have been identified as key factors associated with firm performance. This paper presents a detailed descriptive analysis of the income gap among a group of micro-businesses (MBs) in Colombia’s Pacific region, examining how various factors relate to this gap. Using data from MBs participating in a program by Foundation WWB Colombia and applying the Oaxaca-Blinder decomposition, the analysis shows that formal MBs owned by men—with stronger financial inclusion and digital skills—tend to generate higher income than their counterparts. Complementary qualitative field-work reveals that micro-entrepreneurs often perceive informal credit as more attractive than bank credit due to its easier access and greater payment flexibil-ity. These findings suggest that policies promoting women’s empowerment, formalization, digital literacy, and access to financial services may contribute to nar-rowing these income gaps among MBs in Colombian’s Pacific Region.