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:
“In America the majority raises formidable barriers around the liberty of opinion; within these barriers an author may write what he pleases, but woe to him if he goes beyond them.”
—Alexis de Tocqueville (1805–1859)
“To deny the need for comprehensive child care policies is to deny a reality—that there’s been a revolution in American life. Grandma doesn’t live next door anymore, Mom doesn’t work just because she’d like a few bucks for the sugar bowl.”
—Editorial, The New York Times (September 6, 1983)
“We go on multiplying our conveniences only to multiply our cares. We increase our possessions only to the enlargement of our anxieties.”
—Anna C. Brackett (1836–1911)
“The last publicized center of American writing was Manhattan. Its writers became known as the New York Intellectuals. With important connections to publishing, and universities, with access to the major book reviews, they were able to pose as the vanguard of American culture when they were so obsessed with the two Joes—McCarthy and Stalin—that they were to produce only two artists, Saul Bellow and Philip Roth, who left town.”
—Ishmael Reed (b. 1938)