Data on Access to and Use of Financial Services: Regulator and Bank Surveys

Asli Demirguc-Kunt DECRG

WB- Brookings Conference on Access to Finance May 30, 2006

Why are we interested in access?

• An extensive literature exists on the links between financial development and growth

• Little, however, on the degree and impact of access to financial services.

• This deficiency is due to lack of data and analysis – Current financial sector indicators are good in

measuring size but not the reach and breadth– Most analyses have focused on determinants and

impact of overall financial sector development

Why would access matter for the outcomes we care about?

• Firms’ access to financial services – Matters because of the impact on growth, and

especially of small and new firms (entry)– To date: ICA and other firm level data

• Households’ access to financial services– Matters because of poverty reduction, risk

mitigation, more voice and inclusion– To date: some data from existing LSMS and

some specialized households surveys

Data Collection Efforts

• Regulator surveys – over 115 countries– Number of branches and ATMs relative to population and area– Number of loans and deposit accounts relative to population– Average size of loans and deposits relative to GDP per capita

• Bank (provider) surveys -530 commercial banks (5 largest) in 106 countries

– Developing indicators of barriers to banking by collecting data on minimum deposit balances, deposit and loan fees, requirements to open a bank account and apply for a bank loan, cost of electronic transfers, etc.

• Household surveys – Pulling together existing data– Going forward – coordinating and designing core set of indicators

to include in HH surveys going forward

All complementary efforts to get a full picture of access

Defining “access” is not easy…

Access vs. Usage • Usage is much easier to measure• However, access is likely to be wider – some may

have access, yet may not wish to use services• Understanding usage requires information on both

demand and supply• Thus need to collect indicators that measure both:

– Actual use of various services (savings, payment, credit)

– Barriers to access, to identify boundaries and causes of exclusion

Access and Use - Regulator Surveys

Over the past year, through surveys of bank regulators – 115 countries were targeted and data on 99 were collected, cleaned and analyzed

• Access to financial services – Branch and ATM penetration, both geographic and demographic

• Actual use of financial services – Number of loans and deposits relative to population; Average size of loans and deposits relative to GDP per capita

• Results show large differences in usage, with developing countries far behind and much more skewed patterns of use

Branches per 100,000 people

0.531.331.532.244.174.414.475.365.996.306.397.638.178.448.509.399.809.98

11.9214.59

30.0830.86

45.6052.07

95.87

10.01

UgandaChina

BoliviaRussia

PeruVenezuela

NamibiaSaudi ArabiaSouth Africa

IndiaUruguay

MexicoPoland

IndonesiaTurkey

ChileMalaysia

JapanArgentinaMauritius

BrazilMalta

United StatesCanada

ItalySpain

Percentile 75

Percentile 50

Percentile 25

Percentile 5

Percentile 95

Loans Per 1000 People

4.38

9.53

47.45

49.59

54.11

54.73

77.92

80.74

93.04

207.13

264.51

328.97

407.21

417.74

556.48

773.87

154.19

Madagascar

Bolivia

Saudi Arabia

Brazil

Russia

Bangladesh

Peru

Namibia

Venezuela

Argentina

Mauritius

Turkey

Malaysia

Malta

Chile

Spain

Poland

Percentile 75

Percentile 50

Percentile 25

Percentile 5

Percentile 95

Deposits per 1000 People

14.46

40.63

214.13

228.75

309.57

316.19

422.96

486.74

630.86

975.64

1,044.82

1,114.23

1,250.10

1,585.99

1,892.28

2,075.96

2,495.81

2,706.07

368.73

Madagascar

Bolivia

Saudi Arabia

Bangladesh

Mexico

Peru

Argentina

Namibia

Venezuela

Brazil

Italy

Chile

Turkey

Malaysia

Mauritius

Russia

Spain

Malta

Denmark

Percentile 75

Percentile 50

Percentile 25

Percentile 5

Percentile 95

Average Loan Size/GDP per Capita

0.33

0.65

1.02

1.60

1.91

2.35

2.45

2.75

2.95

4.23

5.16

6.18

6.24

7.73

10.74

14.26

18.35

27.89

1.77

Poland

Turkey

Venezuela

Chile

Argentina

Spain

Italy

Peru

Mauritius

Malaysia

Russia

Namibia

Brazil

Malta

Saudi Arabia

Uganda

Pakistan

Madagascar

Bolivia

Percentile 75

Percentile 50

Percentile 25

Percentile 5

Percentile 95

Deposit Size/GDP per Capita

0.07

0.10

0.25

0.26

0.35

0.40

0.44

0.46

0.46

0.68

0.92

1.22

1.27

1.60

2.28

3.93

5.81

7.98

9.31

0.58

Russia

Dominican Republic

Romania

Bulgaria

Trinidad and Tobago

Brazil

Spain

Mexico

Chile

Argentina

Turkey

Malaysia

Malta

Namibia

Bangladesh

Saudi Arabia

Uganda

Bolivia

Zimbabwe

Madagascar

Percentile 75

Percentile 50

Percentile 25

Percentile 5

Percentile 95

Using regulator data we see…

• In the absence of household and firm level data we can predict household and firm use of financial services using these indicators

• better outreach is correlated with greater financial sector depth, greater banking freedoms, better governance, better physical infrastructure and with more private bank ownership.

• firms report facing lower financing constraints in countries with better outreach even controlling for depth.

Barriers to Access - Bank surveysBanks - Surveys of 530 commercial banks (5 largest) in 106

countries – Factors banks consider when deciding where to locate a

branch or ATM.– Documentation requirements to open accounts.– Minimum balance requirements, account fees, restrictions for

different types of deposit accounts.– Interest rates on deposit accounts.– Loan application procedures and documentation.– Loan fees, interest rates, and collateral and paperwork

requirements for different types of loans– Factors influencing credit and collateral decisions – Payment services and fees

• Data from 249 participants in 88 countries to date

Minimum Balance to Open a Savings Account % of GDP per Capita

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.01%

0.04%

0.09%

0.10%

0.24%

0.54%

0.80%

0.89%

0.98%

1.03%

1.24%

1.38%

1.40%

2.02%

2.91%

12.18%

21.26%

24.33%

48.80%

Australia

Denmark

Spain

Turkey

Japan

United Kingdom

Sweden

Bosnia-Herzegovina

Slovenia

Brazil

Tunisia

Peru

Bolivia

Bulgaria

Bangladesh

Greece

Colombia

South Africa

Lithuania

Hungary

Argentina

Philippines

Ghana

Armenia

Uganda 95th Percentile

75th Percentile

50th Percentile

25th Percentile

5th Percentile

Annual Fees Associated with Savings Account% of GDP per Capita

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.03%

0.03%

0.03%

0.09%

0.11%

0.23%

0.35%

0.37%

1.13%

1.34%

1.87%

3.36%

Armenia

Bangladesh

Bulgaria

DenmarkGhana

Hungary

Japan

LithuaniaPhilippines

Slovenia

Sweden

Turkey

United KingdomBrazil

Greece

Spain

AustraliaTunisia

Colombia

Bosnia-Herzegovina

Peru Argentina

South Africa

Bolivia

Uganda 95th Percentile

75th Percentile

50th Percentile

Fees Charged on Consumer Loans% of GDP per Capita

0.00%

0.21%

0.21%

0.49%

0.53%

0.55%

0.73%

0.78%

0.80%

1.18%

1.22%

1.25%

1.31%

1.35%

1.47%

1.49%

1.65%

1.76%

2.66%

2.72%

2.73%

3.16%

3.36%

3.39%

3.40%

Japan

Bangladesh

Sweden

United KingdomAustralia

South Africa

Lithuania

TunisiaTurkey

Slovenia

Colombia

Spain

Peru Bulgaria

Bosnia-Herzegovina

Denmark

Ghana Philippines

Uganda

Greece

ArmeniaBrazil

Hungary

Bolivia

Argentina95th Percentile

75th Percentile

50th Percentile

25th Percentile

5th Percentile

Fees Charged on SME Loans% of GDP per Capita

0.00%0.10%0.11%

0.22%0.34%

0.64%0.67%

0.90%1.03%1.09%1.14%

1.28%1.45%1.46%1.46%1.49%1.52%1.60%1.64%

1.78%2.21%2.25%

2.46%3.57%

4.07%

Japan

Peru

Colombia

Sweden

ArmeniaSlovenia

Lithuania

South Africa

Spain

Bosnia-HerzegovinaUnited Kingdom

Australia

Tunisia

Hungary

Turkey Denmark

Philippines

Argentina

Ghana

BulgariaUganda

Bangladesh

Brazil

Bolivia

Greece95th Percentile

75th Percentile

50th Percentile

25th Percentile

5th Percentile

Fees Charged on Business Loans% of GDP per Capita

0.00%0.10%

0.14%

0.21%

0.27%0.34%

0.46%

0.77%1.07%

1.14%

1.17%

1.19%1.39%

1.45%

1.46%

1.49%1.52%

1.59%

1.59%1.60%

2.02%

2.46%

2.91%3.44%

5.44%

Japan

Peru

Bangladesh

SwedenColombia

Armenia

Slovenia South Africa

Spain

United Kingdom

LithuaniaBosnia-Herzegovina

Ghana

TunisiaHungary

Denmark

Philippines

Uganda Bulgaria

Argentina

Turkey Brazil

Australia

Bolivia

Greece95th Percentile

75th Percentile

50th Percentile

25th Percentile

5th Percentile

Number of Days to Process Consumer Loan Applications

0.130.75

1.001.001.001.001.131.301.37

1.701.771.912.00

2.332.39

2.604.754.815.01

5.225.365.38

9.1910.19

11.33

SpainDenmarkAustralia

Brazil GreeceUnited

Slovenia Uganda

South Africa Sweden

JapanPeru

ArgentinaLithuaniaColombia

Turkey Hungary Bulgaria

Bangladesh Bosnia-

ArmeniaBoliviaTunisiaGhana

Philippines

95th Percentile

75th Percentile

50th Percentile

25th Percentile

5th Percentile

Costs of International Money Transfers% of GDP per Capita

0.03%

0.08%

0.08%

0.08%

0.10%

0.12%

0.13%

0.17%

0.32%

0.32%

0.41%

0.44%

0.48%

0.51%

0.52%

0.54%

1.02%

1.19%

1.38%

1.39%

1.85%

2.86%

3.02%

4.11%

10.62%

Denmark

Australia

United Kingdom

Sweden

Japan

Bulgaria

Slovenia

Hungary

Turkey

Uganda

South Africa

Philippines

Spain

Lithuania

Bosnia-Herzegovina

Peru

Argentina

Colombia

Bangladesh

Greece

Brazil

Tunisia

Bolivia

Armenia

Ghana 95th Percentile

75th Percentile

50th Percentile

25th Percentile

5th Percentile

Moving Forward

Data will help us answer key policy-relevant questions:

• How well the financial system in different countries serve the poor and the enterprises that employ the poor?

• Access to which types of financial services has the greatest impact on reducing poverty and lifting the growth rates in deprived regions?

• What are the chief obstacles to access?

• What policy interventions and institutional arrangements can improve access for underserved groups?

Already having impact – central role in the UN Year of Microcredit, speeches of the UN Secretary General, citations in the Economist (Survey article, indicators)