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Measuring Access to Finance

Access to Finance

 

The first step in improving access is measuring it

While data on financial sector depth – aggregate credit, stock market liquidity, etc. – are readily available, data on access to and use of financial services, especially on the household level are wanting, partly because of the cost of such data collection, partly because of methodological hurdles. 

In the absence of micro-data, researchers have sought to create synthetic headline indicators, combining more readily available data on the number of deposit or loan accounts with the results of a few existing household surveys. 

These headline indicators reveal a large variation in the use of financial services: almost all households use finance in many Continental European countries, but on average fewer than one in three households do in most of the developing world.

Financial exclusion thus affects not only the poor, but also large proportion of the non-poor population in many developing countries.

Proportion of households with an account in a financial institution

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In addition to measuring finance, it is important to identify the barriers that prevent small firms and households in many developing countries from using financial services.  These include:

  • Physical access to the nearest branch or bank outlet;
  • a lack of proper documentation, such as identification, pay-slip or proof of residence;
  • high minimum account balances and annual fees to open and maintain checking and savings accounts.


 

 

 

 

 


 

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