Banking services for everyone? Barriers to bank access and use around the world

Using information from 209 banks in 62 countries, we develop new indicators of barriers to banking services around the world, show their correlation with existing measures of outreach, and explore their association with other bank and country characteristics suggested by theory as potential determinants. Barriers such as minimum account and loan balances, account fees and documentation requirements are negatively correlated with outreach and these barriers exclude a large percentage of the population from using banking services in many countries. Factors associated with financial depth such as the effectiveness of credit information sharing, creditor rights and contract enforcement are highly correlated with barriers, but so are non-financial factors such as the development of the infrastructure and the extent of media freedom. More competitive banking systems and market-based supervisory policies are associated with lower barriers. Contrary to conventional wisdom, government banks are not associated with lower access barriers. Instead, bank customers face higher barriers to credit services in banking systems which are predominantly government-owned, while a larger share of foreign bank ownership is associated with lower barriers in deposit services.