Our study critically surveys financial inclusion in Latin American and Caribbean countries, gauging access to both credit and deposit accounts by poor households. Our review confirms some pieces of conventional wisdom in this area, but challenges some others. Regarding the latter, we claim that (a) Limited financial inclusion does not simply follows from unfair discrimination against the poor, but to a great deal from a low demand for financial services and scarce access for the population at large. In this sense, we argue that supply-side constraints have a second-order importance; (b) Despite the impressive progress of microfinance in recent years, stakeholders should avoid overoptimism, rooted in an apparent over-advertisement of a few successful cases. While a potentially powerful tool to fight poverty, microcredit must be carefully targeted, and granted by highly specialized intermediaries under commercially-oriented criteria; (c) Although financial inclusion is a social matter, the private sector has provided more and better responses than the public sector. Furthermore, these private programs have proven to be quite profitable; (d) Recent experiences in several LAC countries hint that governments can play a decisive role in coordinating financial inclusion initiatives, leading normative changes, and supporting innovative banking outreach strategies without engaging directly in credit allocation; and (e) Governments, donors and intermediaries should make coordinated efforts to assemble microdata and encourage sound impact evaluations comparable across countries and time. A number of policy recommendations emerge from the analysis.
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Paper provided by CEDLAS, Universidad Nacional de La Plata in its series Working Papers with number
0068.
References listed on IDEAS 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.:
Dean Karlan & Xavier Gine & Jonathan Morduch & Pamela Jakiela, 2006.
"Microfinance Games,"
Working Papers
936, Economic Growth Center, Yale University.
[Downloadable!]
Other versions:
Xavier Gine & Pamela Jakiela & Dean Karlan & Jonathan Morduch, 2006.
"Microfinance Games,"
Working Papers
2102, The Field Experiments Website.
[Downloadable!]