Banking the Poor - a new report from the World Bank - comes at an interesting time. All eyes are on the financial crisis, prompting a rethink on regulatory regimes in many countries. This report offers up some interesting data on just what effect regulation has on access to finance.
A few highlights from this 100+ page report drawing on data from 54 developing countries. One general finding is that certain types of regulation appear to be detrimental to access to finance. As one might expect, the more documents required to open a bank account, the fewer bank accounts per thousand adults:
However, this is not a cut-and-dry story of "more regulation=less access." Two types of regulation, if done right, may help facilitate greater access to finance. First, formal sector jobs tended to facilitate access to finance. Consequently, getting larger segments of the population into the formal sector may help increase financial access. Second, regulators in some countries had requirements that banks offer stripped down or simplified banking products aimed at the poor. These requirements didn't consistently improve access because of uneven implementation, but could hold some promise.
For more on the report, check out news coverage (in French) of its release in Mauritius:
- Maurice, bonne élève de la Banque mondiale
- MBC TV (coverage starts at 12:24)
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