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Microfinance Banks and Household Access to Finance

  • Brown, Martin

    ()

  • Guin, Benjamin

    ()

  • Kirschenmann, Karolin

    ()

We examine how the expansion of the branch network of a microfinance bank between 2006 and 2010 in South-East Europe has affected the use of bank accounts by households in the region. Our analysis is based on survey data reporting the use of bank accounts, socioeconomic characteristics and geographic location of 8,000 households in four countries. We geocode the location of each household and match this data with branch location information for the major microfinance bank in the region, ProCredit Bank, as well as for a large retail bank in each country. We report three key results: First, in locations where ProCredit opened a new branch between 2006 and 2010 the share of households with a bank account increased more than in locations where it did not open a new branch. Second, a new ProCredit branch leads to a stronger increase in the use of bank accounts among low- and middle-income households than among high-income households. Third, we find that ProCredit not only opens branches in areas with high economic activity, but also in areas where average household incomes are low. Overall our results suggest that microfinance banks do expand the frontier of finance as compared to ordinary retail banks.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/sfwpfi/WPF-1302.pdf
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Paper provided by University of St. Gallen, School of Finance in its series Working Papers on Finance with number 1302.

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Length: 44 pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:usg:sfwpfi:2013:02
Contact details of provider: Phone: +41 71 243 40 11
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Web page: http://www.unisg.ch/de/Schools/Finance.aspx

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  1. Aterido, Reyes & Beck, Thorsten & Iacovone, Leonardo, 2011. "Gender and finance in Sub-Saharan Africa : are women disadvantaged ?," Policy Research Working Paper Series 5571, The World Bank.
  2. Casey B. Mulligan & Xavier Sala-i-Martin, 2000. "Extensive Margins and the Demand for Money at Low Interest Rates," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 961-991, October.
  3. Beck, Thorsten & Demirguc-Kunt, Asli & Martinez Peria, Maria Soledad, 2005. "Reaching out : access to and use of banking services across countries," Policy Research Working Paper Series 3754, The World Bank.
  4. Beck, T.H.L. & Demirgüc-Kunt, A. & Martinez Peria, M., 2008. "Banking services for everyone? Barriers to bank access and use around the world," Other publications TiSEM 667b51d6-c698-43ce-9777-e, Tilburg University, School of Economics and Management.
  5. Robert Cull & Asli Demirguç-Kunt & Jonathan Morduch, 2007. "Financial performance and outreach: a global analysis of leading microbanks," Economic Journal, Royal Economic Society, vol. 117(517), pages F107-F133, 02.
  6. Gunhild Berg, 2010. "Evaluating The Impacts Of Microsaving: The Case Of Sewa Bank In India," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(1), pages 75-96, March.
  7. Claeys, Sophie & Hainz, Christa, 2007. "Acquisition versus greenfield: The impact of the mode of foreign bank entry on information and bank lending rates," Working Paper Series 210, Sveriges Riksbank (Central Bank of Sweden).
  8. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
  9. 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.
  10. Atif Mian, 2006. "Distance Constraints: The Limits of Foreign Lending in Poor Economies," Journal of Finance, American Finance Association, vol. 61(3), pages 1465-1505, 06.
  11. Vernon Henderson & Adam Storeygard & David N. Weil, 2011. "A Bright Idea for Measuring Economic Growth," American Economic Review, American Economic Association, vol. 101(3), pages 194-99, May.
  12. repec:ner:tilbur:urn:nbn:nl:ui:12-3125425 is not listed on IDEAS
  13. Mersland, Roy & Strøm, R. Øystein, 2010. "Microfinance Mission Drift?," World Development, Elsevier, vol. 38(1), pages 28-36, January.
  14. Grosjean, Pauline, 2011. "The institutional legacy of the Ottoman Empire: Islamic rule and financial development in South Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 39(1), pages 1-16, March.
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