The Unbanked Four-Fifths: Informality and Barriers to Financial Services in Nigeria
Four-fifths of the adult population do not have access to formal financial services in Nigeria. This paper examines the characteristics of 'unbanked' households in Nigeria, investigates the extent and determinants of supply and demand side barriers, and explores the specific role played by informality in financial exclusion. There is evidence to suggest that in Nigeria the unbanked four-fifths have lower incomes, lower education, are less likely to have a mobile phone, and have lower levels of financial sector knowledge and formal documents in their name than the remainder of the population. A non-mutually exclusive framework for analysing barriers to formal banking is developed and insights on the characteristics of sub-groups of the unbanked population who face particular barriers are provided. While poverty and distance to bank branch are the most important barriers cited, informality also plays a significant role and tackling informality directly represents an opportunity for financial inclusion policy. Using instrumental variables, the precise role played by informality in financial exclusion is estimated and for individuals with four and five documents, it is found that an additional document increases the probability of being banked by 17 percent and 15 percent respectively. Length: 45 pages
|Date of creation:||Oct 2012|
|Date of revision:|
|Contact details of provider:|| Postal: 01|
Phone: 00 353 1 896 3888
Fax: 00 353 1 896 3939
Web page: http://www.tcd.ie/iiis/
More information through EDIRC
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.:
- Vassilis A. Hajivassiliou & Axel Borsch-Supan, 1990.
"Smooth Unbiased Multivariate Probability Simulators for Maximum Likelihood Estimation of Limited Dependent Variable Models,"
Cowles Foundation Discussion Papers
960, Cowles Foundation for Research in Economics, Yale University.
- Borsch-Supan, Axel & Hajivassiliou, Vassilis A., 1993. "Smooth unbiased multivariate probability simulators for maximum likelihood estimation of limited dependent variable models," Journal of Econometrics, Elsevier, vol. 58(3), pages 347-368, August.
- Vassilis A. Hajivassiliou & Daniel L. McFadden & Paul Ruud, 1993.
"Simulation of Multivariate Normal Rectangle Probabilities and their Derivatives: Theoretical and Computational Results,"
_024, Yale University.
- Hajivassiliou, Vassilis & McFadden, Daniel & Ruud, Paul, 1996. "Simulation of multivariate normal rectangle probabilities and their derivatives theoretical and computational results," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 85-134.
- Beck, Thorsten & de la Torre, Augusto, 2006. "The basic analytics of access to financial services," Policy Research Working Paper Series 4026, The World Bank.
- Gordon H. Hanson, 2010.
"Why Isn't Mexico Rich?,"
NBER Working Papers
16470, National Bureau of Economic Research, Inc.
- Oded Galor & Joseph Zeira, 1993.
"Income Distribution and Macroeconomics,"
Review of Economic Studies,
Oxford University Press, vol. 60(1), pages 35-52.
- Patrick Honohan & Thorsten Beck, 2007. "Making Finance Work for Africa," World Bank Publications, The World Bank, number 6626.
- Djankov, Simeon & Miranda, Pedro & Seira, Enrique & Sharma, Siddharth, 2008. "Who are the unbanked ?," Policy Research Working Paper Series 4647, The World Bank.
- Honohan, Patrick, 2008. "Cross-country variation in household access to financial services," Journal of Banking & Finance, Elsevier, vol. 32(11), pages 2493-2500, November.
- World Bank, 2008. "Finance for All? Policies and Pitfalls in Expanding Access," World Bank Publications, The World Bank, number 6905.
- Michael King, 2012. "Is Mobile Banking Breaking the Tyranny of Distance to Bank Infrastructure? Evidence from Kenya," The Institute for International Integration Studies Discussion Paper Series iiisdp412, IIIS.
- Erik Jonasson, 2011.
"Informal Employment and the Role of Regional Governance,"
Review of Development Economics,
Wiley Blackwell, vol. 15(3), pages 429-441, 08.
- Jonasson, Erik, 2009. "Informal Employment and the Role of Regional Governance," Working Papers 2009:10, Lund University, Department of Economics, revised 27 Sep 2010.
When requesting a correction, please mention this item's handle: RePEc:iis:dispap:iiisdp411. 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: (Colette Keleher)
If references are entirely missing, you can add them using this form.