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Household Financial Assets in the Process of Development

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  • Honohan, Patrick

Abstract

Systematic information on household financial asset holdings in developing countries is very sparse. The author reviews some available data and current policy debates. Although financial asset holdings by households are highly concentrated, deeper financial systems are correlated with improved income distribution. For low-income countries, the relevant question for poor households is not how much financial assets they have, but whether they have any access to financial products at all. Building on and synthesizing disparate data collection efforts by others, the author produces new estimates of access percentages for over 150 countries. Across countries access is negatively correlated with poverty rates, but the correlation is not a robust one: thus the supposed anti-poverty potential of financial access remains econometrically elusive. Despite policy focus on the value of credit instruments, it is deposit products that tend to be the first to be used as prosperity increases, before more sophisticated savings products and borrowing.
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Suggested Citation

  • Honohan, Patrick, 2006. "Household Financial Assets in the Process of Development," WIDER Working Paper Series 091, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:rp2006-91
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    Cited by:

    1. Warnock, Veronica Cacdac & Warnock, Francis E., 2008. "Markets and housing finance," Journal of Housing Economics, Elsevier, vol. 17(3), pages 239-251, September.
    2. Beck, Thorsten & de la Torre, Augusto, 2006. "The basic analytics of access to financial services," Policy Research Working Paper Series 4026, The World Bank.
    3. Barrett, Alan & Kearney, Ide & McCarthy, Yvonne, 2006. "Quarterly Economic Commentary, Winter 2006," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20064.
    4. Demirguc-Kunt, Asli & Levine, Ross, 2008. "Finance and economic opportunity," Policy Research Working Paper Series 4468, The World Bank.
    5. Laura Capera & Andrés Murcia Pabón & Dairo Estrada, "undated". "Efectos de los Límites a las Tasas de Interés sobre la Profundización Financiera," Temas de Estabilidad Financiera 057, Banco de la Republica de Colombia.
    6. Claessens, Stijn & Feijen, Erik, 2006. "Finance and hunger : empirical evidence of the agricultural productivity channel," Policy Research Working Paper Series 4080, The World Bank.
    7. Claessens, Stijn & Perotti, Enrico, 2007. "Finance and inequality: Channels and evidence," Journal of Comparative Economics, Elsevier, vol. 35(4), pages 748-773, December.
    8. Beck, Thorsten & Feyen, Erik & Ize, Alain & Moizeszowicz, Florencia, 2008. "Benchmarking financial development," Policy Research Working Paper Series 4638, The World Bank.

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