Access to Finance

This paper provides an overview of the importance of access to finance and the main obstacles to access across the world. It presents an overview of the differences in access across different regions:

• Sub-Saharan Africa is far behind in expanding financial access due to extreme poverty;
• Asia is very advanced in expanding financial access, particularly in the more rapidly industrializing countries;
• More advanced transition economies of Central Europe have progressed extremely well in rebuilding access but most CIS countries lag behind.

The paper highlights main constraints to financial access which include:

• Absence of basic pre-requisites for monetised exchange, namely proximity of a relevant bank and literacy;
• High cost of banking services;
• Absence of legal and organizational foundations for economic activity.

The paper emphasizes that the public and private sector should collaborate to address the issue of access and exclusion through:

• Careful and consistent measurement of access;
• Addressing the issue of literacy, both financial and general;
• Amendment of banking regulations to reduce costs of rural branch networks and bank based microfinance.

The paper concludes that:

• Financial access has to be understood differently from the issue of exclusion, as the solutions are different;
• Proximity banks are the most pro-active in improving access;
• Governments can significantly improve access by improving the foundations of the civil society.