Barriers and Policies To Increase Access
However, in many countries financial access is still limited to only 20–50 percent of the population, excluding many poor individuals and SMEs. Many recents could explain the limited financial access especially among the poor. First, the poor lack the education and knowledge needed to understand financial services that are available to them. Second, loan officers might find it unprofitable to serve the small credit needs and transaction volume of the lower-income population. Additionally, banks may not be geographically accessible for the poor since financial institutions are likely to be located in richer neighborhoods. The poor are also burdened by lack of collateral and inability to borrow against their future income because their income streams tend to be hard to track and predict.
In light of the lack of financial access for the poor, over the past few decades developments in microfinance institutions have managed to provide financial services to some of the world’s poorest, and achieved good repayments.
There are still work to be done to build inclusive financial systems. This includes taking advantage of the technological advances in developing financial infrastructure to lower transaction costs, encouraging transparency, openness and competition to incentivize current institutions to expand service coverage, and enforcing prudential regulations in order to provide the private sector with the right incentives.
Read more about this topic: Access To Finance
Famous quotes containing the words barriers, policies, increase and/or access:
“The principle that human nature, in its psychological aspects, is nothing more than a product of history and given social relations removes all barriers to coercion and manipulation by the powerful.”
—Noam Chomsky (b. 1928)
“We urgently need a debate about the best ways of supporting families in modern America, without blinders that prevent us from seeing the full extent of dependence and interdependence in American life. As long as we pretend that only poor or abnormal families need outside assistance, we will shortchange poor families, overcompensate rich ones, and fail to come up with effective policies for helping families in the middle.”
—Stephanie Coontz (20th century)
“The increase in wisdom can be measured precisely by the decrease in bile.”
—Friedrich Nietzsche (1844–1900)
“Power, in Case’s world, meant corporate power. The zaibatsus, the multinationals ..., had ... attained a kind of immortality. You couldn’t kill a zaibatsu by assassinating a dozen key executives; there were others waiting to step up the ladder; assume the vacated position, access the vast banks of corporate memory.”
—William Gibson (b. 1948)