Measuring access to finance
According to recent reports more than 70 percent of people in Latin America lack access to such basic financial services as a checking or savings account. The percentage of households without a checking account in industrial countries is typically below 20 percent: 12 percent in the U.K., 9 percent in the U.S., and less than 2 percent in Scandinavian countries.
The subject of a new book by Michael Barr, Anjali Kumar and Robert Litan is exactly how to measure access. What units should be used to determine access individuals, households, or firms? What difference does it make whether the supplier of financial services is legally recognized or not?
The authors also study the link between access and poverty reduction, the role of commercial banks and government in improving financial access, and innovation in financial infrastructure (the graph below shows the adoption of: 1. Bank IT; 2. ATM; 3. Electronic funds transfer at point-of-sale (EFT POS); 4. Internet; and 5. Mobile-banking technologies over time).
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It used to be that what banks should first and utmost do is to give those credits that help to generate decent jobs and to distribute the opportunities so that capitals end up in the hands of those most able to do something with it. That was a long time ago. Now financial development has mostly to do with the development of the financial entities themselves. One day we are going to wake up to the fact that the last standing enterprise in our countries is a well capitalized bank and that the last job to have is as an economically efficient substitute for an automated bank teller.
What comes first? Development or the access to electronic funds transfers at point-of-sale?
Posted by: Per Kurowski | Nov 12, 2007 9:26:02 AM