Financial Access

Financial Access

Access to finance refers to the possibility that individuals or enterprises can access financial services, including credit, deposit, payment, insurance, and other risk management services. Those who involuntarily have no or only limited access to financial services are referred to as the unbanked or underbanked, respectively.

Accumulated Eevidences have shown that financial access provides credit for the most promising firms promotes growth for enterprises through the provision of credit in the most promising firms, encourages more start ups, and enables incumbent firms to grow by exploiting growth and investment opportunities. It brings benefit to the economy benefits the economy in general by accelerating economic growth, intensifying competition, as well as boosting the demand for labor. In turn, Tthis helps those at the raises income for those in the lower end of the income distribution in reducing income inequality and poverty.

The lack of financial access limits the range of services and credits for household and enterprises. Poor individuals and small enterprises need to rely on their personal wealth or internal resources to invest in their education and businesses, which limits their full potential and leading to the cycle of persistent inequality and diminished growth.

Access to finance varies greatly between countries and ranges from about 5 percent of the adult population in Papua New Guinea and Tanzania to 100 percent in the Netherlands (for a comprehensive list of estimated measures of access to finance across countries, see Demirgüç-Kunt, Beck, & Honohan, 2008, pp. 190–191).