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Which Households Use Banks? Evidence from the Transition Economies

  • Thorsten Beck
  • Martin Brown

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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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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  17. Goldberg, Lawrence G & Saunders, Anthony, 1981. "The Growth of Organizational Forms of Foreign Banks in the U.S.: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 13(3), pages 365-74, August.
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  20. Buch, Claudia M. & Lipponer, Alexander, 2004. "FDI versus cross-border financial services: The globalisation of German banks," Discussion Paper Series 1: Economic Studies 2004,05, Deutsche Bundesbank, Research Centre.
  21. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  22. Shawn A. Cole, 2008. "Fixing Market Failures or Fixing Elections? Agricultural Credit in India," Harvard Business School Working Papers 09-001, Harvard Business School.
  23. Asim Ijaz Khwaja & Atif Mian, 2005. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1371-1411, November.
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  25. 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.
  26. Focarelli, Dario & Pozzolo, Alberto Franco, 2001. "The patterns of cross-border bank mergers and shareholdings in OECD countries," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2305-2337, December.
  27. Sapienza, Paola, 2004. "The effects of government ownership on bank lending," Journal of Financial Economics, Elsevier, vol. 72(2), pages 357-384, May.
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  29. Adam, Christopher & Collier, Paul & Ndung'u, Njuguna (ed.), 2010. "Kenya: Policies for Prosperity," OUP Catalogue, Oxford University Press, number 9780199602377.
  30. 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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