The World Bank Economic Review Advance Access originally published online on October 22, 2008
The World Bank Economic Review 2008 22(3):517-537; doi:10.1093/wber/lhn016
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
The Unbanked: Evidence from Indonesia
Donald Johnston Jr. is an economist based in Jakarta, Indonesia
Jonathan Morduch (corresponding author) is professor of public policy and economics at the Wagner Graduate School of Public Service, New York University, and managing director of the Financial Access Initiative;
Correspondence: his email address is jonathan.morduch{at}nyu.edu
JEL codes: G21, O16
To analyze the prospects for expanding financial access to the poor, bank professionals assessed 1,438 households in six provinces in Indonesia to judge their creditworthiness. About 40 percent of poor households were judged creditworthy according to the criteria of Indonesia's largest microfinance bank, but fewer than 10 percent had recently borrowed from a microbank or formal lender. Possessing collateral appeared as a minor determinant of creditworthiness, in keeping with microfinance innovations. Although these households were judged able to service loans reliably, most desired small loans. Calculations show that the bank, given its current fee structure and banking practices, would lose money when lending at the scales desired. So, while innovations have helped to extend financial access, it remains difficult to lend in small amounts and cover costs.
CiteULike 
Connotea 
Del.icio.us What's this?
This article has been cited by other articles:
|
|
 |
|
  T. Beck, A. Demirguc-Kunt, and P. Honohan Access to Financial Services: Measurement, Impact, and Policies World Bank Res. Obs., February 27, 2009; (2009) lkn008v1. [Abstract] [Full Text] [PDF]
|
|