The World Bank Economic Review Advance Access published online on November 7, 2008
The World Bank Economic Review, doi:10.1093/wber/lhn020
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Banking Services for Everyone? Barriers to Bank Access and Use around the World
Correspondence: Email address is mmartinezperia{at}worldbank.org
JEL codes: G2, G21, O16
Information from 209 banks in 62 countries is used to develop new indicators of barriers to banking services around the world, show their correlation with measures of outreach, and explore their association with bank and country characteristics suggested by theory as potential determinants. Barriers such as minimum account and loan balances, account fees, and required documents are associated with lower levels of banking outreach. While country characteristics linked with financial depth, such as the effectiveness of creditor rights, contract enforcement mechanisms, and credit information systems, are weakly correlated with barriers, strong associations are found between barriers and measures of restrictions on bank activities and entry, bank disclosure practices and media freedom, and development of physical infrastructure. In particular, barriers are higher in countries where there are more stringent restrictions on bank activities and entry, less disclosure and media freedom, and poorly developed physical infrastructure. Also, barriers for bank customers are higher where banking systems are predominantly government-owned and are lower where there is more foreign bank participation. Larger banks seem to impose lower barriers on customers, perhaps because they are better positioned to exploit economies of scale and scope.
Thorsten Beck is a professor of economics and center fellow and chair of the European Banking Center at the University of Tilburg; his email address is T.Beck{at}uvt.nl. Asli Demirgüç-Kunt is a senior research manager, Finance and Private Sector Development, in the Development Economics Research Group at the World Bank; her email address is Ademirguckunt{at}worldbank.org. Maria Soledad Martinez Peria (corresponding author) is a senior economist in the Development Economics Research Group at the World Bank. The authors thank Jerry Caprio, Stijn Claessens, Simeon Djankov, Matthew Gamser, Xavier Giné, Patrick Honohan, Leora Klapper, Inessa Love, David Porteous, Emanuel Rocher, Susana Sánchez, L. Alan Winters, two anonymous referees, the journal editor, and participants at the World Bank conference on Access to Finance for comments and suggestions. Edward Al-Hussainy, Andrew Claster, Subika Farazi, Ning Jiang, and Hamid Rashid provided excellent research assistance at different stages of this project. A supplemental appendix to this article is available at http://wber.oxfordjournals.org/.
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