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2
Access to Banking Services
How many persons have access to banking services? What matters for access to banking services?
Reform oriented indicators - 54 countries Africa (35 countries) South and East Asia (6 and 8 countries), respectively, Central America (4 countries) and Mexico.
Survey Instruments 2 questionnaires: Commercial Banks and Central Banks
3
Numbers of Accounts Vary Widely…
Barely 9 bank accounts per 000 adults in Chad. Fewer than 35 accounts per 000 adults in Rwanda,
Liberia and Madagascar 550 accounts per 000 adults in South Africa, the richest
African county, with a per capita income more than tenfold that of Chad
But 2,010 accounts per 000 adults in Mauritius, the second richest country in Africa, which has the most financial access
1,352 accounts per 000 in Thailand (5th best), compared to 83 in Vietnam and 464 in Indonesia.
4
Main Measures Explored and Findings
1. Accounts per 000: income is a key factor
2. Complexity: documents to open an account, days to open
an account, loan application processes - associated with reduced access
3. Costs: opening charges, maintenance costs - recurring charges and complex fee structures matter
4. Quality and Convenience Features: enhance banking services for the already banked but are not likely to bring new entrants
5. Special Schemes – basic banking, special savings vehicles: – hard to find a measurable impact upon access
6. Mobile technology, retail payments services: increase convenience / depth
7. Transparency, information, institutions, competition: associated with better access
5
1. Income Matters Most for Accounts/000
Income explains a large part of access to bank accounts
Accounts per 000 Adults and Income
Philippines
NepalNamibia
Malawi
Lesotho
Honduras
Ghana Angola
Chad
Gabon
Malaysia
India
Bangladesh
BeninCambodia
Liberia
NicaraguaPakistan
Botswana
Burundi Central African Republic
Ethiopia
Guatemala
Mali
Mauritius
Mexico
Niger
Singapore
South Africa
Sri Lanka
Sudan
Swaziland
Thailand
UgandaVietnam
Zambia
Coef = 0.62, t-stat = 8.51 Log GDP pc
Log
Acc
ount
s pe
r 00
0 A
dults
6
2. More complexity, less access for individuals
Documents Needed to Open an Account : 5 in Cote d’Ivoire, Nicaragua Only 1 in Singapore, Thailand
Documents Required to O pen an Account and Access
Thailand
Tanzania Nicaragua
Mauritius
Indonesia Chad
Burundi
ZambiaSudanRwandaPakistan
NamibiaMexicoLesotho Cote d'Ivoire
Burkina Faso
Cape VerdeSri Lanka
South Africa
Gambia
Cambodia
BotswanaSierra Leone
Malaysia
Honduras
GabonAngola
NepalLiberia
Kenya
IndiaBenin Bangladesh
Coef = -153.5, t-stat = -3.3 Documents Required
Acc
coun
ts p
er 0
00 A
dults
7
Opening an Account can be complex…
Days to Open an Account•More days, less access
Country Days Country Days
Mexico 3.0 Thailand 0.5Pakistan 2.8 Cameroon 0.5South Africa 2.8 Chad 0.5Gabon 2.5 Malaysia 0.5Botswana 2.3 Ethiopia 0.6
Longest wait Shortest Wait
8
More complexity, less access for firms…
More complex business loan applications mean fewer small firms use working capital credit…
Reduced Access for Small Firms
South Africa
TanzaniaSwazilandSenegal
Rwanda
PhilippinesMali Madagascar
Sri Lanka
Indonesia
Honduras CameroonVietnam
Thailand
El SalvadorNicaraguaNiger
Mauritius
Cambodia
Kenya
Gambia Ghana
Ethiopia
Cape VerdeBotswana
Burkina Faso
Benin
Angola
Coef = -31, t-stat = -2.11 Business Loan Complexity of Loan Procedures
`% o
f sm
all m
icro
firm
s w
ith
loan
s fo
r wor
king
cap
ital
9
Country performance on index of business loan complexity
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Nig
erE
thio
pia
Indi
aH
ondu
ras
Vie
tnam
Sene
gal
Sing
apor
eM
ali
Cam
eroo
nB
otsw
ana
Bur
kina
Fas
oSo
uth
Afr
ica
Paki
stan
Mau
ritiu
sL
aos
Nep
alB
urun
diSw
azila
ndT
haila
ndSu
dan
Rw
anda
Nam
ibia
Mal
aysi
aM
adag
asca
rG
ambi
aC
AR
Ang
ola
Afg
hani
stan
Sri L
anka
Ken
yaC
had
Ben
inT
anza
nia
Cam
bodi
aB
angl
ades
hZ
ambi
aPh
ilipp
ines
Gha
naE
l Sal
vado
rC
ape
Ver
deN
iger
iaM
alaw
iL
iber
iaSi
erra
Leo
neN
icar
agua
Moz
ambi
que
Les
otho
Indo
nesi
aG
abon
DR
C
10
3. Some Costs Matter – Ongoing Costs
Monthly maintenance fee, as a % monthly wage is: 51.5% in Rwanda; 0.05% in Singapore
Over half of all sampled banks charge monthly fees Fees in Africa tend to be higher ($4, vs. 0.50c in Asia) 20% of banks report other charges such as fees for a checkbook or an ATM People dislike paying fragmented fees
11
Annual fees for cash and debit cards
Annual Fee for Cash and Debit Cards (US$)
0 1 2 3 4 5 6 7
South Asia
East Asia
CentralAmerica
Africa
12
Periodic monthly fee for current account maintenace in Thailand is 1.39 USD
Lowest Fees USD Highest Fees USD
Sudan 14.93 Pakistan 0.27Mexico 11.49 Angola 0.22Cote d'Ivoire 11.04 Cambo-dia 0.21Senegal 9.00 Nigeria 0.16Liberia 7.82 Gambia 0.05Ethiopia 6.83 Afghanistan 0.00Niger 6.08 India 0.00Kenya 5.86 Namibia 0.00Zambia 5.76 Nepal 0.00DRC 5.64 Vietnam 0.00
Source: Getting Finance Database
Periodic monthly fees for current account maintenance (USD)
13
Remittance Costs Also Matter…
Higher Costs for Receiving a Banker’s Draft - Lower Financial Access
Financial Access and the Cost of Receiving a Banker's Draft
Namibia
Ghana
Sri Lanka
Niger
Mexico
Malaysia
ZambiaUganda
Thailand Tanzania
South Africa
Mauritius
Laos
IndiaEthiopia
Côte d'IvoireChad
Cape verde
CameroonCambodia
BotswanaMalawi
Burundi
Benin
Cost of Receiving a Banker's Draft Coef=-269.557 , t=-2.13
14
4. What Doesn’t Seem to Influence Access?...Convenience Features…
Index of convenience features (0-1)
Higher End Index Lower End Index
Senegal 0.81 Sri Lanka 0.35Kenya 0.79 Thailand 0.33CAR 0.75 Afghanistan 0.31India 0.75 Laos 0.30Malawi 0.75 Bangladesh 0.29Mexico 0.75 Cote d'Ivoire 0.25Nicaragua 0.75 Malaysia 0.25Botswana 0.70 Ethiopia 0.15Burkina Faso 0.70 Liberia 0.10Nepal 0.70 Guatemala 0.00
Source: Getting Finance Databasenote: The index of usage convenience is an equally weighted mean of responses to: passbook not required, after hours access available, overdraft provision and whether a customer is notified of overdraft.
15
5. Special Measures don’t seem to promote access…
‘Basic’ or simplified accounts? However, experiments are small and new Commercial banks schemes also don’t show association
Matched savings may work Require governments to make matching contributions to private
savings, in some agreed proportion But such schemes require subsidies Only offered in Singapore in our sample
Yet 22 countries offer tax incentives for savings Many governments prefer to forgo revenue through tax waivers
instead of spending on subsidies
Door Step Collection Schemes India, Philippines, Indonesia, Ghana
16
6. Phone, Internet and Mobile Technologies overview
Banking services can be offered via ATMs, Internet, Cell Phones
No association with number of accounts All banks in Thailand offer balance
inquiries over Internet About 50% of banks in Thailand offer
balance inquieries via cell phones M-banking holds promise
17
Mobile Technologies increase financial depth but not access
Private Credit/GDP and Mobile Technology
Angola
BotswanaCape verde
DRC
Gabon
Guatemala
Honduras
Indonesia
KenyaMalawi
Malaysia
Nicaragua
Nigeria
Singapore South AfricaThailand
Vietnam
Mobile Technology IndexCoef=25.36, t=1.75
18
The network quality and interoperability index for Thailand is 0.88
Network quality and interoperability index (0-1)
Higher End Index Lower End Index
Honduras 1.00 Cambodia 0.20India 1.00 Ethiopia 0.20Indonesia 1.00 Laos 0.20Malaysia 1.00 Sierra Leone 0.20Mauritius 1.00 Burundi 0.12Mexico 1.00 Niger 0.08Nicaragua 1.00 CAR 0.00Nigeria 1.00 Chad 0.00Pakistan 1.00 Gambia 0.00Philippines 1.00 Liberia 0.00
Source: Getting Finance Database
note: The Network quality and interoperability index comprises 2 variables assessing the interoperability of payments networks: (i) whether debit cards can be used at ATMs belonging to other banks which share the banks' network; and (ii) whether debit cards can be used at merchants through Points of Sale devices.
19
7. What Else Matters? Increased competition, transparency, creditors rights…
Banks in countries with more competitive banking sectors are less bureaucratic.
Thailand: Asset share of top three banks: less than 45% Documents required to open an account: 1 on average
Nicaragua: Asset share of top 3 banks: 95% Documents required to open an account: 5 on average
20
Increasing disclosure can increase access
Clear, transparent bank regulations Transparent fees Informed customers Procedures for complaints Clear credit application guidelines Financial literacy programs
21
Increasing disclosure
Working Capital Loans and Credit Guidelines
Angola
Lesotho
ZambiaSouth Africa
Uganda
Thailand
El SalvadorNicaragua
Malawi
Mauritius
Mexico
Sri Lanka
KenyaGhana
Benin
Cape VerdeGambiaGuatemala
Mali
P akistan
Rwanda
Swaziland
Coef. = 16.76, t=3.2 Credit Application Guidelines Index
22
Banking the Poor Snapshots
1.24
61.38
3.54
28
50.64
1.593.88
16.87
28.227.2325.31
10.31
0
10
20
30
40
50
60
70
Annual Debit CardFee US$
Fee to receive $250remittance
Small firms withbank loans %
Firms that use loansfor investments %
Thailnd
East Asia
54 Countries
23
Banking the Poor Snapshots
2.00
0.50
1.001.00
2.00
0.50
0.800.540.46 0.48
0.67
3.05
0
1
1
2
2
3
3
4
Transparency andconsumer protection
index (0-1)
Index of collateralflexibility (0-1)
Start-up loanprocessing fee %
Documents to openan account
Thailand
East Asia
54 Countries
24
Next Steps
New Regulators Survey in 140 countries Measuring broader access to finance:
Commercial Banks Microfinance Institutions Development Banks Credit Unions, Cooperatives
Part of the new CGAP initiative