1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. Branches per 100,000 people

8. Loans Per 1000 People

9. Deposits per 1000 People

10. Average Loan Size/GDP per Capita

11. Deposit Size/GDP per Capita

12. 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.

13. Barriers to Access - Bank surveys Banks - 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

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

15. Annual Fees Associated with Savings Account % of GDP per Capita

16. Fees Charged on Consumer Loans % of GDP per Capita

17. Fees Charged on SME Loans % of GDP per Capita

18. Fees Charged on Business Loans % of GDP per Capita

19. Number of Days to Process Consumer Loan Applications

20. Costs of International Money Transfers % of GDP per Capita

21. 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)