The Basic Analytics Of Access To Financial Services

Abstract

Access to financial services, or rather the lack thereof, is often indiscriminately decried as problem in many developing countries. This paper argues that the "problem of access" should rather be analyzed by identifying different demand and supply constraints. We use the concept of an access possibilities frontier, drawn for a given set of state variables, to distinguish between cases where a financial system settles below the constrained optimum, cases where this constrained optimum is too low, and-in credit services-cases where the observed outcome is excessively high. We distinguish between payment and savings services and fixed intermediation costs, on the one hand, and lending services and different sources of credit risk, on the other hand. We include both supply and demand side frictions that can lead to lower access. The analysis helps identify bankable and banked population, the binding constraint to close the gap between the two, and policies to prudently expand the bankable population. This new conceptual framework can inform the debate on adequate policies to expand access to financial services and can serve as basis for an informed measurement of access.

A Second-Order Factor Gender-Measurement Invariance Analysis of Financial Exclusion in Ilorin, Nigeria

“…However, these studies also noted that factors like lending terms and conditions, geographical proximity, documentation complexities, procedural bureaucracy, collateral security requirement, and high financial charges etc significantly explain involuntary financial exclusion among people especially the poor. This is in addition to the findings in [18] and [19] that financial illiteracy or lack of awareness also explains involuntary financial exclusion.…”

“…Apparently due to their commercial orientation, their entire marketing mix elements are not focused on the poor. Consequently, given any of or the combination of some or all the four factors above, some people may voluntarily exclude themselves from using financial services even when they have access.According to [19], this is the height of psychological response to systematic financial exclusion.…”

Customer Satisfaction in Operation of Pradhan Mantri Jan Dhan Yojana (PMJDY) Account: An Empirical Evidence

“…The pertinent study included in this section provides the base for the development of hypothesis and appropriate items of the interview schedule. Beck and De la Torre, (2006) has observed that the outreach of financial services to an area is referred as breadth of financial services. In common term breadth indicates how many people have access to financial services.…”

“…In the recent years, financial inclusion has become a global agenda across the world for achieving sustainable and economic development of the country. Many empirical studies revealed that greater outreach and accessibility of finance in small firms in many countries has got a greater growth rate (Beck et al, 2006). Increase in accessibility of finance plays a greater role in reducing the inequality and increasing the income of the poor people.…”

Commercial bank financing for micro-enterprises and SMEs in Mexico

“…This is the case in countries with legal systems which tend to protect the borrower and where legal processes are lengthy and inefficient (Beck and de la Torre, 2007).…”