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Which Households Use Banks? Evidence from the Transition Economies

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  • Thorsten Beck
  • Martin Brown

Abstract

This paper uses survey data for 29,000 households from 29 transition economies to explore how the use of banking services is related to household characteristics, bank ownership structure and the development of the financial infrastructure. At the household level we find that the holding of a bank account or bank card increases with income, wealth and education in most countries and also find evidence for an urban-rural gap, as well as for a role of religion and social integration. Our results show that foreign bank ownership is associated with more bank accounts among high-wealth, high-income, and educated households. State ownership, on the other hand, does not induce financial inclusion of rural and poorer households. We find that higher deposit insurance coverage, better payment systems and creditor protection encourage the holding of bank accounts in particular by highincome and high-wealth households. All in all, our findings shed doubt on the ability of policy levers to broaden the financial system to disadvantaged groups.

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Bibliographic Info

Paper provided by Swiss National Bank in its series Working Papers with number 2011-01.

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Length: 45 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:snb:snbwpa:2011-01

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Keywords: Access to finance; Bank-ownership; Deposit insurance; Payment system; Creditor protection.;

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References

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  1. Brown, Martin & Jappelli, Tullio & Pagano, Marco, 2007. "Information Sharing and Credit: Firm-Level Evidence from Transition Countries," CEPR Discussion Papers 6313, C.E.P.R. Discussion Papers.
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  7. Cull, Robert & Senbet, Lemma W. & Sorge, Marco, 2001. "Deposit insurance and financial development," Policy Research Working Paper Series 2682, The World Bank.
  8. Ergungor, O Emre, 2004. "Comment on "Bank Competition and Access to Finance: International Evidence" by Thorsten Beck, Asli Demirguc-Kunt, and Vojislav Maksimovic," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 649-54, June.
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  17. Shawn A. Cole, 2008. "Fixing Market Failures or Fixing Elections? Agricultural Credit in India," Harvard Business School Working Papers 09-001, Harvard Business School.
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  21. Aterido, Reyes & Beck, Thorsten & Iacovone, Leonardo, 2011. "Gender and finance in Sub-Saharan Africa : are women disadvantaged ?," Policy Research Working Paper Series 5571, The World Bank.
  22. Ralph de Haas & Ilko Naaborg, 2005. "Does Foreign Bank Entry Reduce Small Firms' Access to Credit? Evidence from European Transition Economies," DNB Working Papers 050, Netherlands Central Bank, Research Department.
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  25. Beck, Thorsten & Cull, Robert & Fuchs, Michael & Getenga, Jared & Gatere, Peter & Randa, John & Trandafir, Mircea, 2010. "Banking sector stability, efficiency, and outreach in Kenya," Policy Research Working Paper Series 5442, The World Bank.
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Cited by:
  1. Kearney, Colm, 2012. "Emerging markets research: Trends, issues and future directions," Emerging Markets Review, Elsevier, vol. 13(2), pages 159-183.
  2. Stix, Helmut, 2013. "Why do people save in cash? Distrust, memories of banking crises, weak institutions and dollarization," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4087-4106.
  3. Brown, Martin & Lane, Philip R., 2011. "Debt overhang in emerging Europe ?," Policy Research Working Paper Series 5784, The World Bank.

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