Resolving the African Financial Development Gap : Cross-Country Comparisons and a Within-Country Study of Kenya

With extensive country and firm-level data sets, this paper first documents that the financial sectors of most Sub-Saharan African countries remain significantly underdeveloped by the standards of other developing countries. The paper also finds that population density appears to be considerably more important for banking sector development in Africa than elsewhere. To better understand how countries can overcome the high costs of developing viable banking sectors outside large metropolitan areas, the analysis focuses on Kenya, which has made significant strides in financial inclusion and development in recent years. The paper finds a positive and significant impact of Equity Bank, a leading private commercial bank, on financial access, especially for underprivileged households. Equity Bank's business model -- providing financial services to population segments typically ignored by traditional commercial banks and generating sustainable profits in the process -- can be a potential solution to the financial access problem that has hindered the development of inclusive financial sectors in many other African countries.

Bibliographic Details

Main Authors:	Allen, Franklin, Carletti, Elena, Cull, Robert, Qian, Jun, Senbet, Lemma, Valenzuela, Patricio
Language:	English en_US
Published:	World Bank, Washington, DC 2013-09
Subjects:	ACCESS TO BANK, ACCESS TO BANK ACCOUNTS, ACCESS TO BANKING, ACCESS TO BANKING SERVICES, ACCESS TO EXTERNAL FINANCE, ACCESS TO FINANCIAL SERVICES, ACCESS TO LOANS, BANK ACCOUNT, BANK ACCOUNTS, BANK ACTIVITY, BANK BRANCH, BANK BRANCH NETWORK, BANK BRANCH NETWORKS, BANK BRANCHES, BANK COMPETITION, BANK CREDIT, BANK LENDING, BANK LOAN, BANK LOANS, BANK POLICY, BANK REGULATION, BANK SPREADS, BANKING MARKET, BANKING SECTOR, BANKING SECTOR DEVELOPMENT, BANKING SECTORS, BANKING SERVICE, BANKING SERVICES, BANKING SYSTEM, BANKING SYSTEMS, BUSINESS CYCLE, BUSINESS TRANSACTIONS, CAPITAL FLOW, CAPITAL MARKET, CAPITAL MARKET DEVELOPMENT, CAPITALIZATION, CHECKS, COMMERCIAL BANK, COMMERCIAL BANK BRANCHES, COMMERCIAL BANKS, COUNTRY COMPARISONS, CREDIT CARD, CREDIT CARD DEBTS, CREDIT CARDS, CREDIT CEILINGS, CREDIT CRUNCH, CREDIT PROVISION, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCE, CURRENT ACCOUNT SURPLUS, DEBT, DEBT INSTRUMENTS, DEBTS, DEMOGRAPHIC, DEPOSIT, DEPOSIT ACCOUNTS, DEPOSIT INSURANCE, DEPOSITORS, DEPOSITS, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPING ECONOMIES, DEVELOPMENT FINANCE, DOMESTIC BANKING, DOMESTIC BANKING MARKETS, DUMMY VARIABLE, DUMMY VARIABLES, EARNINGS, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC PERFORMANCE, ECONOMIC SUCCESSES, EDUCATIONAL ATTAINMENT, EMERGING MARKETS, ENROLLMENT, EQUITY MARKETS, EXCESS LIQUIDITY, EXPORTER, EXTERNAL FINANCING, FINANCIAL ACCESS, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL FRAGILITY, FINANCIAL INSTITUTIONS, FINANCIAL INTEGRATION, FINANCIAL INTERMEDIATION, FINANCIAL LIBERALIZATION, FINANCIAL REFORMS, FINANCIAL SECTOR, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL SECTOR REFORMS, FINANCIAL SECTORS, FINANCIAL SERVICES, FINANCIAL STATEMENTS, FINANCIAL SUPPORT, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, FINANCING SOURCES, FIRM GROWTH, FLOWS OF CAPITAL, FOREIGN BANK, FOREIGN BANKS, FOREIGN CAPITAL, FOREIGN DIRECT INVESTMENT, FOREIGN ENTRY, FOREIGN OWNERSHIP, FORMAL FINANCE, GLOBAL INVESTMENT, GLOBAL MARKETS, GLOBALIZATION, GOVERNANCE INDICATORS, GOVERNMENT BANKS, GOVERNMENT OWNERSHIP, GOVERNMENT OWNERSHIP OF BANKS, GOVERNMENT POLICIES, GROWTH RATES, HOLDING, HOME COUNTRY, HOUSEHOLD ACCESS, HOUSEHOLDS, HUMAN CAPITAL, HUMAN CAPITAL DEVELOPMENT, INCOME, INCOME INEQUALITY, INCOME LEVELS, INEQUALITY, INFLATION, INFORMAL SAVINGS, INSTITUTIONAL DEVELOPMENT, INTEREST RATE, INTERNATIONAL BANK, INVESTMENT CLIMATE, INVESTMENT FLOW, LEGAL CONSTRAINTS, LEVELS OF ACCESS, LOAN, LOAN MARKET, LOCAL BANKS, LOW-INCOME COUNTRIES, MACROECONOMIC CONDITIONS, MACROECONOMIC ENVIRONMENT, MACROECONOMIC INSTABILITY, MACROECONOMIC STABILITY, MACROECONOMIC VARIABLES, MAJORITY OF SHARES, MARKET CAPITALIZATION, MARKET CONCENTRATION, MARKET DEVELOPMENT, MARKET FAILURES, MARKET SHARES, MARKET TRANSACTIONS, MARKET VALUE, METROPOLITAN AREAS, MFIS, MICROFINANCE, MICROFINANCE INSTITUTIONS, MIDDLE-INCOME COUNTRIES, MOBILE BANKING, MOBILE PHONE, MONEY TRANSFER, NATURAL RESOURCE, NATURAL RESOURCES, NEGATIVE SHOCK, NEW BUSINESS, NONBANK FINANCIAL INSTITUTIONS, OFFSHORE CENTER, OFFSHORE CENTERS, OFFSHORE FINANCIAL CENTER, OFFSHORE FINANCIAL CENTERS, OPPORTUNITY COST, OUTREACH, OWNERSHIP STRUCTURES, PAYMENTS SERVICES, POSITIVE COEFFICIENT, POVERTY ALLEVIATION, PRIMARY SCHOOL ENROLMENT, PRIVATE BANKS, PRIVATE CREDIT, PRIVATE SECTOR DEVELOPMENT, PRIVATIZATIONS, PROVISION OF CREDIT, PRUDENTIAL REGULATION, RAPID GROWTH, REPAYMENT, RESERVES, RETAINED EARNINGS, RISK MANAGEMENT, SAVINGS, SAVINGS MECHANISMS, SHAREHOLDER, SOURCES OF FINANCE, STOCK EXCHANGE, STOCK EXCHANGES, STOCK MARKET, STOCK MARKET CAPITALIZATION, STOCK MARKET DEVELOPMENT, STOCK MARKETS, SUPERVISION OF BANKS, TECHNOLOGICAL ADVANCES, TELEPHONE BANKING, TRANSPORTATION INFRASTRUCTURE, TURNOVER, URBAN AREAS, VEHICLES FOR SAVINGS, WORKING CAPITAL,
Online Access:	http://documents.worldbank.org/curated/en/2013/01/18207012/resolving-african-financial-development-gap-cross-country-comparisons-within-country-study-kenya https://hdl.handle.net/10986/16043
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