The Basic Analytics of Access to Financial Services

Access to financial services, or rather the lack thereof, is often indiscriminately decried as a problem in many developing countries. The authors argue that the "problem of access" should rather be analyzed by identifying different demand and supply constraints. They 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. They 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. The authors 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 the basis for an informed measurement of access.

Bibliographic Details

Main Authors:	Beck, Thorsten, de la Torre, Augusto
Language:	English en_US
Published:	World Bank, Washington, DC 2006-10
Subjects:	ACCOUNTING, ACCOUNTING SYSTEMS, ADVERSE SELECTION, AGENCY PROBLEMS, AGGREGATE DEMAND, AGGREGATE SUPPLY, ASYMMETRIC INFORMATION, BANK ACCOUNTS, BANK BRANCHES, BANKING SYSTEM, BORROWING, CAPITAL REQUIREMENTS, CATERING, CHECKING ACCOUNTS, COMPETITION, COMPETITIVENESS, CONSOLIDATION, CONTESTABILITY, CONTRACT ENFORCEMENT, CREDIT RISK, DEFAULT RISK, DEMAND CURVE, DEMAND CURVES, DEMAND SIDE, DEPOSIT ACCOUNTS, DEPOSITS, DEREGULATION, DISECONOMIES OF SCALE, ECONOMIC, ECONOMIC DEMAND, ECONOMIC GROWTH, ECONOMIC SIZE, ECONOMIES OF SCALE, EMERGING MARKETS, ETHNIC GROUPS, EXTERNALITIES, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIARIES, FINANCIAL MARKET, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL SYSTEMS, FIXED COSTS, FOREIGN BANKS, HEALTH SERVICES, IMPERFECT COMPETITION, INCOME, INEFFICIENCY, INFLATION, INFLATION RATE, INSURANCE, INTEREST RATE, LENDING PRACTICES, LIQUIDITY, LOTTERY, MARKET POTENTIAL, MARKET STRUCTURE, MARKETING, MERGERS, MORAL HAZARD, NETWORK EXTERNALITIES, NOMINAL INTEREST RATE, OPERATIONAL RISK, PAYMENT SYSTEMS, PER CAPITA INCOME, POLICY, POTENTIAL DEMAND, PRESENT VALUE, PRODUCTION FUNCTION, PRODUCTION FUNCTIONS, PROFIT FUNCTIONS, PUBLIC GOOD, REAL INTEREST RATE, REGULATORY FRAMEWORK, REGULATORY POLICY, RETAIL, SAVINGS, SAVINGS ACCOUNTS, SAVINGS BANKS, SAVINGS RATES, SECURITIES, SMALL BANKS, SPREAD, SUBSIDIARIES, SUPPLIERS, SUPPLY CURVE, SUPPLY CURVES, SUPPLY SCHEDULE, SYSTEMIC RISK, TRANSACTION COSTS, TRANSACTIONS COSTS, TRANSPORT, VOLATILITY, WEALTH,
Online Access:	http://documents.worldbank.org/curated/en/2006/10/7105064/basic-analytics-access-financial-services https://hdl.handle.net/10986/9271
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