Finance for All?: Policies and Pitfalls in Expanding AccessWorld Bank Publications, 2007 M11 9 - 264 pages Access to financial services varies sharply around the world. In many developing countries less than half the population has an account with a financial institution, and in most of Africa less than one in five households do. Lack of access to finance is often the critical mechanism for generating persistent income inequality, as well as slower growth. 'Finance for All?: Policies and Pitfalls in Expanding Access' documents the extent of financial exclusion around the world; addresses the importance of access to financial services for growth, equity and poverty reduction; and discusses policy interventions and institutional reforms that can improve access for underserved groups. The report is a broad ranging review of the work already completed or in progress, drawing on research utilizing data at the country, firm and household level. Given that financial systems in many developing countries serve only a small part of the population, expanding access remains an important challenge across the world, leaving much for governments to do. However, not all government actions are equally effective and some policies can be counterproductive. The report sets out principles for effective government policy on broadening access, drawing on the available evidence and illustrating with examples. |
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access to credit access to finance accounts adverse selection Aslı Bangladesh banking system barriers Basel II Beck borrowers branch broadening access capital collateral competition costs credit registries cross-country Demirgüç-Kunt deposit deposit accounts developing countries economic growth effect enterprises entrepreneurs entry equity evaluation evidence example external finance figure financial access financial depth financial development Financial Economics financial institutions financial market financial sector development financial services firm growth foreign banks formal Giné Grameen Bank higher Honohan impact important improving access income inequality increase indicators infrastructures interest rates investment joint-liability Karlan lack lenders Levine loans low-income Maksimovic Martinez Peria measures MFIs microcredit microfinance moral hazard Morduch obstacles payments percent Policy Research political potential poverty reduce reforms relationship lending remittances repayment Research Working Paper result risk role savings small firms subsidies surveys tion transactions Washington World Bank
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Page 6 - East Asia and Pacific Europe and Central Asia Latin America and the Caribbean Middle East and North Africa...
Page 248 - Revolution on recycled paper with 30 percent post-consumer waste, in accordance with the recommended standards for paper usage set by the Green Press Initiative, a nonprofit program supporting publishers in using fiber that is not sourced from endangered forests.
Page 31 - The interest rate which an individual is willing to pay may act as one such screening device: those who are willing to pay high interest rates may, on average, be worse risks; they are willing to borrow at high interest rates, because they perceive their probability of re-paying the loan to be low. As the interest rate rises, the average 'riskiness' of those who borrow increases, possibly lowering the bank's profits.
Page 31 - ... the actions of borrowers (the incentive effect). Both effects derive directly from the residual imperfect information which is present in loan markets after banks have evaluated loan applications. When the price (interest rate) affects the nature of the transaction, it may not also clear the market. The adverse selection aspect of interest rates is a consequence of different borrowers having different probabilities of repaying their loan. The expected return to the bank obviously depends on the...
Page 32 - reserve the term credit rationing for circumstances in which either (a) among loan applicants who appear to be identical some receive a loan and others do not, and the rejected applicants would not receive a loan even if they offered to pay a higher interest rate; or (b) there are identifiable groups of individuals in the population who, with a given supply of credit, are unable to obtain loans at any interest rate, even though with a larger supply of credit, they would.
Page 214 - Law, Finance, and Economic Growth in China." Journal of Financial Economics 77 (1): 57-116. . 2008. "China's Financial System: Past, Present, and Future.
Page 32 - Clearly, it is conceivable that at /"•* the demand for funds exceeds the supply of funds. Traditional analysis would argue that, in the presence of an excess demand for loans, unsatisfied borrowers would offer to pay a higher interest rate to the bank, bidding up the interest rate until demand equals supply. But although supply does not equal demand at f*, it is the equilibrium interest rate! The bank would not lend to an individual who offered to pay more than r'.
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Page 31 - For both these reasons, the expected return by the bank may increase less rapidly than the interest rate and beyond a point may actually decrease, as depicted in figure 1. The interest rate at which the expected return to the bank is maximized, we refer to as the "bank-optimal