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Banking Services for Everyone? Barriers to Bank Access and Use around the World

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Author Info
Thorsten Beck
Asli Demirgüç-Kunt
Maria Soledad Martinez Peria

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Abstract

Information from 209 banks in 62 countries is used to develop new indicators of barriers to banking services around the world, show their correlation with measures of outreach, and explore their association with bank and country characteristics suggested by theory as potential determinants. Barriers such as minimum account and loan balances, account fees, and required documents are associated with lower levels of banking outreach. While country characteristics linked with financial depth, such as the effectiveness of creditor rights, contract enforcement mechanisms, and credit information systems, are weakly correlated with barriers, strong associations are found between barriers and measures of restrictions on bank activities and entry, bank disclosure practices and media freedom, and development of physical infrastructure. In particular, barriers are higher in countries where there are more stringent restrictions on bank activities and entry, less disclosure and media freedom, and poorly developed physical infrastructure. Also, barriers for bank customers are higher where banking systems are predominantly government-owned and are lower where there is more foreign bank participation. Larger banks seem to impose lower barriers on customers, perhaps because they are better positioned to exploit economies of scale and scope. Copyright The Author 2008. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/wber/lhn020
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Publisher Info
Article provided by Oxford University Press in its journal The World Bank Economic Review.

Volume (Year): 22 (2008)
Issue (Month): 3 (November)
Pages: 397-430
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Handle: RePEc:oup:wbecrv:v:22:y:2008:i:3:p:397-430

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Demirguc-Kunt, Asli & Serven, Luis, 2009. "Are all the sacred cows dead ? implications of the financial crisis for macro and financial policies," Policy Research Working Paper Series 4807, The World Bank. [Downloadable!]
  2. Ricardo N. Bebczuk, 2008. "Financial Inclusion in Latin America and the Caribbean: Review and Lessons," Working Papers 0068, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
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