PAPER WRAP-UP: World Bank Policy Research Working Paper: Who are the Unbanked?

Written by Simeon Djankov, Pedro Miranda, Enrique Seira and Siddharth Sharma of the World Bank Private Sector Development Department Enterprise Analysis Unit, this paper was published in June 2008 as a 27 page document available here.

Based on a nationwide survey of 5,000 Mexican households, this report investigates why so few people in the region have saving’s accounts. The survey sample included clients of savings and credit cooperatives and unbanked households living within the same communities.

Currently in Mexico only about ten percent of the growth domestic product (GDP) is held in savings accounts. Less than 25 percent of the urban population and only six percent of the rural population have saving’s accounts.

Nearly 90 percent of the unbanked households in the sample cited “not having enough money” as a main reason for not having a bank account. All respondents lived in close vicinity to a savings and credit cooperative branch. Only two percent of respondents stated that they did not trust the cooperatives, and one percent mentioned bank fees as a reason.

The banked households in the sample had a per capita annual income that was 40 percent higher on averaged than the unbanked sample households. Eighty-nine percent of banked households in the survey had accounts with formal microfinance institutions.

Forty percent of the total households sampled earned their income as wage-workers with relatively stable incomes. The report concludes that the unbanked households in the survey sample did not use financial services by choice due to a lack of knowledge on the benefits of microfinance services offered by their local savings and credit cooperatives. Potential clients often assumed that they did not have enough money to use available financial services.  

The report recommends the implementation of policies geared toward educating and changing the working unbanked population’s attitude towards savings and loans.

By Melissa Duscha

 

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