Access to Financial Services: What Do We Know Across Countries?

Why is access to financial services low in poor countries?
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This presentation attempts to draw a contrast in the availability of financial services across the poor (Brazil, Columbia, Mexico and India) and the rich countries (USA, England and Scotland) by presenting statistical indicators such as population per bank branch, area covered by a branch, number of people with bank accounts etc.

The statistics (covering the respondents) show that:

  • The conventional banking service levels in poor countries are only a third or a quarter of USA's service levels;
  • The population of the poor countries with a bank account is less than half - 25% in Mexico to 47.5% in India;
  • A high proportion of the unbanked have no financial savings;
  • Most of the income in the poor countries is received in cash (except in Mexico);
  • The percentage of the population not applying for loans is very high in the poor countries - 85% in Brazil to 97% in India.

The presentation elaborates on some of the reasons behind the statistics:

  • Lack of perceived needs, on the demand side, could be a reason why the poor don't use banks;
  • Documentation cost and unfriendly service, on the supply side, is a factor for low population coverage.

It also questions:

  • Is the high preference for cash due to the costs associated with formal financial institutions?

The presentation concludes with the key lessons learnt and the strategy for the future:

  • Only a small proportion of the population wants credit: 3-15% of the respondents surveyed;
  • Many perceive that they would not receive credit due to lack of a steady income stream;
  • Preference for cash and formal financial institutions is high across all sample countries;
  • Better designed demand estimation tools are required;
  • The analyses need to be more standardized.