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Understanding financial inclusion in China

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  • Fungáčová, Zuzana
  • Weill, Laurent

Abstract

We use data from the World Bank Global Findex database for 2011 to analyze financial inclusion in China, including comparisons with the other BRICS countries. We find a high level of financial inclusion in China manifested by greater use of formal account and for-mal saving than in the other BRICS. Financial exclusion, i.e. not having a formal account, is mainly voluntary. The use of formal credit is however less frequent in China than in the other BRICS. Borrowing through family or friends is the most common way of obtaining credit in all the BRICS countries, but other channels for borrowing are not very commonly used by individuals in China. We find that higher income, better education, being a man, and being older are associated with greater use of formal accounts and formal credit in China. Income and education influence the use of alternative sources of borrowing. Overall financial inclusion does not constitute a major problem in China, but such limited use of formal credit can create a challenge for further economic development. JEL Codes: G21, O16, P34 Keywords: financial inclusion, financial institutions, China

Suggested Citation

  • Fungáčová, Zuzana & Weill, Laurent, 2014. "Understanding financial inclusion in China," BOFIT Discussion Papers 10/2014, Bank of Finland, Institute for Economies in Transition.
  • Handle: RePEc:bof:bofitp:2014_010
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    References listed on IDEAS

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    1. repec:src:readsj:v:1:y:2015:i:1:p:21-32 is not listed on IDEAS
    2. repec:kap:jfamec:v:38:y:2017:i:4:d:10.1007_s10834-017-9531-x is not listed on IDEAS
    3. repec:gam:jsusta:v:10:y:2018:i:4:p:1200-:d:141288 is not listed on IDEAS
    4. Evans, Olaniyi, 2016. "Determinants of Financial Inclusion in Africa: A Dynamic Panel Data Approach," MPRA Paper 81326, University Library of Munich, Germany.
    5. Evans, Olaniyi, 2015. "The Effects of Economic and Financial Development on Financial Inclusion in Africa," Review of Economics and Development Studies, CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan, vol. 1(1), pages 21-32, June.
    6. repec:bis:bisifc:46-18 is not listed on IDEAS

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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