364:. Many reasons could explain the limited financial access especially among the poor. First, the poor lack the education and knowledge needed to understand financial services that are available to them. Second, loan officers might find it unprofitable to serve the small credit needs and transaction volume of the lower-income population. Additionally, banks may not be geographically accessible for the poor since financial institutions are likely to be located in richer neighborhoods. The poor are also burdened by lack of collateral and inability to borrow against their future income because their income streams tend to be hard to track and predict.
140:
Involuntary non-users want to use financial services, but do not have access due to a variety of reasons: First, they may be unbankable because their low income prevents them from being served commercially (i.e. profitably) by financial institutions; second, they may be discriminated against based on
241:
Estimating and measuring access to finance is relatively difficult because relevant data are not readily available. A lack of consistent cross-country data on the use of financial services has led to the use of the number of deposit and loan accounts as a simple measure of financial access, although
254:
that are part of the financial system. A distinction is made between formal and informal providers of financial services, which is based primarily on whether there is a legal infrastructure that provides recourse to lenders and protection to depositors. The following table gives an overview of this
106:
Measuring financial access is essential for strengthening the link between theory and empirical evidence. Currently, the main proxy variables that measure financial access include: the number of bank accounts per 1,000 adults, number of bank branches per 100,000 adults, the percentage of firms with
102:
Access to finance (the possibility that individuals or enterprises can access financial services) should be distinguished from the actual use of financial services, because non-use of finance can be voluntary or involuntary. Voluntary non-users of financial services have access to but do not use
371:
There are still work to be done to build inclusive financial systems. This includes taking advantage of the technological advances in developing financial infrastructure to lower transaction costs, encouraging transparency, openness and competition to incentivize current institutions to expand
351:
A more detailed approach to distinguishing formal and informal financial services adds semi-formal services as a third segment to the above. While formal financial services are provided by financial institutions chartered by the government and subject to banking regulations and supervision,
157:
is the "access frontier," which can be used for analyzing the development of markets over time. The access frontier defines the maximum proportion of the population that has access to a product or service at a given point in time, and the frontier may shift over time, e.g. as the result of
59:
Accumulated evidence has shown that financial access promotes growth for enterprises through the provision of credit to both new and existing businesses. It benefits the economy in general by accelerating economic growth, intensifying competition, as well as boosting
145:
requirements or a lack of information from credit registries) prevent financial institutions from commercially serving these non-users; finally, the price or features of financial services may not be appropriate for the population groups of the non-users.
79:. Poor individuals and small enterprises need to rely on their personal wealth or internal resources to invest in their education and businesses, which limits their full potential and leading to the cycle of persistent inequality and diminished growth.
176:
The following table gives an overview of the grouping of consumers into users and non-users, the segmentation of non-users, as well as three zones that enable government policies to better match interventions to the requirements of market development.
352:
semi-formal financial services are not regulated by banking authorities but are usually licensed and supervised by other government agencies. Informal financial services are provided outside the structure of government regulation and supervision.
367:
In light of the lack of financial access for the poor, over the past few decades developments in micro finance institutions have managed to provide financial services to some of the world's poorest, and achieved good repayments.
168:
Those who should be able to use the product or service within the next three to five years, based on changes in the features of the product or service, or of the market, respectively (non-users, lying within the future access
561:
381:
158:
technological and competitive changes in the market. The access frontier approach distinguishes between users and non-users of a product or service, and segments non-users into four groups:
443:
Richardson, B. (2008, July 15). Enhancing
Customer Segmentation Processes and Optimising Adoption Techniques to Support Efforts to "Bank the Unbanked." Presentation given during the
149:
Because the factors that determine whether or not an individual or enterprise has access to finance may change over time, it makes sense to group the banked and unbanked into
103:
financial services either because they have no need for those services or because they decided not to make use of such services due to cultural, religious, or other reasons.
94:(for a comprehensive list of estimated measures of access to finance across countries, see Demirgüç-Kunt, Beck, & Honohan, 2008, pp. 190–191).
472:
Demirgüç-Kunt, A., Beck, T., & Honohan, P. (2008). Finance for All?: Policies and
Pitfalls in Expanding Access. Washington, D.C.: The World Bank.
122:, for a high degree of concentration reflects greater difficulties for entry of newer and smaller firms. Other factors include the percentage of
508:
133:(3 month and 10 years), ratio of private to total debt securities (domestic), ratio of domestic to total debt securities, and the ratio of new
172:
Those beyond the reach of market solutions in the next three to five years (the supra-market group, lying beyond the future access frontier)
594:
360:
However, in many countries financial access is still limited to only 20–50 percent of the population, excluding many poor individuals and
141:
social, religious, or ethnic grounds; third, they may be unbankable because contractual and informational networks (such as high
578:
432:
165:
Those who can currently access the product or service but do not yet (non-users, lying within the present access frontier)
372:
service coverage, and enforcing prudential regulations in order to provide the private sector with the right incentives.
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that reflect their current and possible future status as users or non-users of financial services. One such approach to
588:
82:
Access to finance varies greatly between countries and ranges from about 5 percent of the adult population in
43:
services. Those who involuntarily have no or only limited access to financial services are referred to as the
546:
361:
616:
595:
https://web.archive.org/web/20101102190415/http://www.mfw4a.org/access-to-finance/access-to-finance.html
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64:. The incomes of those in the lower end of the income ladder will typically rise hence reducing
251:
123:
579:
http://siteresources.worldbank.org/INTFINFORALL/Resources/4099583-1194373512632/FFA_book.pdf
543:
From
Informal Finance to Formal Finance in Sub-Saharan Africa: Lessons from Linkage Efforts.
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http://siteresources.worldbank.org/INTFINFORALL/Resources/4099583-1194373512632/FFA_book.pdf
142:
119:
8:
333:
Not legally registered at national level (though may belong to a registered association)
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65:
162:
Those who are able to use the product or service but choose not to (voluntary non-users)
20:
115:
83:
24:
512:
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distinction by showing the segments of financial systems by degree of formality.
130:
127:
40:
28:
589:
http://siteresources.worldbank.org/AFRICAEXT/Resources/Africa_Finance_report.pdf
502:
The Access
Frontier as an Approach and Tool in Making Markets Work for the Poor.
150:
134:
108:
315:
Legally registered, but not licensed as financial institution by central bank
610:
545:
Washington, D.C.: International
Monetary Fund. Retrieved March 8, 2009, from
504:
Somerville, MA: Bankable
Frontier Associates. Retrieved May 28, 2008, from
386:
61:
382:
List of countries by share of population with access to financial services
71:
The lack of financial access limits the range of services and credits for
547:
https://www.imf.org/external/np/seminars/eng/2008/afrfin/pdf/Aryeetey.pdf
91:
51:
456:
Beck, Demirgüç-Kunt and Levine, 2007 and Beck, Levine, and Levkov, 2010
97:
72:
36:
87:
76:
45:
530:
Microfinance
Handbook: An Institutional and Financial Perspective.
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http://www.bankablefrontier.com/assets/access-frontier-as-tool.pdf
431:
Washington, D.C.: The World Bank. Retrieved March 21, 2008, from
32:
232:
The supra-market group, lying beyond the future access frontier
391:
575:
Finance for All?: Policies and
Pitfalls in Expanding Access.
429:
Finance for All?: Policies and
Pitfalls in Expanding Access.
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245:
468:
466:
464:
462:
573:
Demirgüç-Kunt, A., Beck, T., & Honohan, P. (2008).
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Demirgüç-Kunt, A., Beck, T., & Honohan, P. (2008).
19:
is the ability of individuals or enterprises to obtain
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and traded value outside of top 10 largest companies,
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593:
Access to
Finance on Making Finance Work for Africa
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Specialized non-bank financial institutions (NBFIs)
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Non-users, lying within the present access frontier
541:Steel (2006), cited in Aryeetey, E. (2008, March).
250:Financial services may be provided by a variety of
224:Non-users, lying within the future access frontier
118:, measuring financial access requires ascertaining
98:
Defining and measuring access to financial services
242:this is an imperfect measure of financial access.
587:Washington, D.C.: The World Bank. Available from
577:Washington, D.C.: The World Bank. Available from
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603:, Foreword by Arnaldo Mauri, Finafrica, Milano.
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445:Mobile Banking & Financial Services Africa
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447:conference in Johannesburg, South Africa.
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356:Barriers and Policies to Increase Access
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246:Formal and informal financial services
583:Honohan, P., & Beck, T. (2007).
535:
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281:Commercial & development banks
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599:Fong, S.F.& Perrett, H.(1991).
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300:Deposit-taking microfinance banks
14:
628:
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532:Washington, D.C.: The World Bank.
585:Making Finance Work for Africa.
307:Small & medium enterprises
197:Current users (current market)
450:
1:
500:Porteous, D. (2005, May 26).
298:Savings & loan companies
7:
375:
235:Market redistribution zone
10:
633:
484:The World Bank GFDR Report
336:Savings (susu) collectors
278:Licensed by central bank
277:
204:
111:(large and small firms).
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252:financial intermediaries
227:Market development zone
528:Ledgerwood, J. (1998).
303:Large rural enterprises
219:Market enablement zone
562:World Bank GFDR Report
90:to 100 percent in the
325:Entrepreneurial poor
124:market capitalization
208:Voluntary non-users
120:market concentration
189:Market policy zone
155:market segmentation
617:Financial services
511:2008-08-21 at the
320:Microfinance NGOs
270:Principal clients
21:financial services
349:
348:
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116:financial markets
66:income inequality
17:Access to finance
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601:Women and Credit
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323:Microenterprises
305:Salaried workers
284:Large businesses
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84:Papua New Guinea
62:demand for labor
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568:Further reading
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186:Market segment
151:market segments
137:issues to GDP.
128:government bond
114:In the case of
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39:, and other
23:, including
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294:Rural banks
286:Government
264:Definition
183:User group
92:Netherlands
77:enterprises
52:underbanked
205:Non-users
143:collateral
330:Informal
296:Post Bank
169:frontier)
73:household
37:insurance
611:Category
509:Archived
376:See also
88:Tanzania
46:unbanked
33:payment
29:deposit
392:WIZZIT
194:Users
131:yields
25:credit
398:Notes
345:Poor
261:Tier
362:SMEs
211:n/a
200:n/a
86:and
75:and
49:or
613::
519:^
489:^
477:^
461:^
406:^
35:,
31:,
27:,
54:,
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