Inclusive Finance - The State of Microfinance Sector in ECA

This report presents an overview of the microfinance sector in Europe and Central Asia as of 2008, focusing on inclusive finance in the region. Physical accessibility of banking services varies from country to country in the region, with European Union countries faring better than the others. Findings indicate that:

• Documentation requirements, barriers of affordability, high minimum balances and lack of appropriate products are barriers to access;
• Education, awareness about financial services and trust in banks help in financial inclusion;
• Use of financial intermediaries' services varies across the ECA region, with the western part excelling over the eastern;
• Financial services use is positively correlated with country economic development and financial sector depth;
• Remittance flows in the ECA countries are large and constantly increasing, and serve as a cushion against economic and political turbulence;
• Use of insurance products is very limited, but there is considerable demand for insurance;
• Microfinance services are provided by credit unions, NGO/NBFIs, microfinance banks and downscaling banks.

Finally, the ECA region still faces the challenge of meeting many of the Millennium Development Goals, with some countries lagging far behind the others.