Examining evidence of financial and credit exclusion in Canada from 1999 to 2005
Changes are occurring in the provision of consumer credit, including the expansion of subprime and some fringe financial services (e.g., payday lending). We link two existing literatures on credit constraint and financial exclusion to assess the impact of these developments on the financial circumstances of low and modest-income consumers. We develop a model that identifies observable measures of credit constraint and financial exclusion and relate them to consumer characteristics and life cycle behaviour. We estimate this model using the two latest Surveys of Financial Security for 1999 and 2005, which provide consistent evidence of credit constraint and financial exclusion through time. We find modest overlap among our measures of financial exclusion, which include a zero balance/no account, credit card refusal, and using a pawnshop. Probit regression is used to investigate the factors influencing the incidence of financial exclusion. The results are similar for 1999 and 2005 and indicate rising incidence of financial exclusion as income and wealth fall, although the relationship is nonlinear such that incidence rises much faster at very low levels of income and wealth. Our analysis also suggests potentially important links between financial literacy, formal education, asset building, and financial exclusion and credit constraint. When we combine the samples, we find statistically significant evidence of growth in the incidence of each indicator of financial exclusion when other factors are held constant. Policy implications may include the strengthening of banking regulations that affect low-income Canadians and the promotion of universal financial literacy.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 38 (2009)
Issue (Month): 6 (December)
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/620175|
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.:
- Santiago Carbo & Edward P. M. Gardener & Philip Molyneux, 2007.
"Financial Exclusion in Europe,"
Public Money & Management,
Chartered Institute of Public Finance and Accountancy, vol. 27(1), pages 21-27, 02.
- Dean S. Karlan & Jonathan Zinman, 2005. "Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment," Working Papers 911, Economic Growth Center, Yale University.
- Adele Atkinson & Stephen McKay & Sharon Collard & Elaine Kempson, 2007. "Levels of Financial Capability in the UK," Public Money & Management, Chartered Institute of Public Finance and Accountancy, vol. 27(1), pages 29-36, 02.
- Jappelli, Tullio & Pagano, Marco, 1988.
"Consumption and Capital Market Imperfection: An International Comparison,"
CEPR Discussion Papers
244, C.E.P.R. Discussion Papers.
- Jappelli, Tullio & Pagano, Marco, 1989. "Consumption and Capital Market Imperfections: An International Comparison," American Economic Review, American Economic Association, vol. 79(5), pages 1088-1105, December.
- Gary Dymski, 2005. "Financial Globalization, Social Exclusion and Financial Crisis," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(4), pages 439-457.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Jappelli, Tullio, 1990. "Who Is Credit Constrained in the U.S. Economy?," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 219-34, February.
- James Devlin, 2005. "A Detailed Study of Financial Exclusion in the UK," Journal of Consumer Policy, Springer, vol. 28(1), pages 75-108, December.
When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:38:y:2009:i:6:p:966-976. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.