How Much Does Having a Bank Account Help the Poor
TL;DR: A bank account is widely regarded as the first step toward financial inclusion of the poor as mentioned in this paper, and funds deposited in a bank account are also observed to lead to higher savings. Exploiting...
Abstract: Having a bank account is widely regarded as the first step toward financial inclusion of the poor. Funds deposited in a bank account are also observed to lead to higher savings. Exploiting ...
Citations
More filters
[...]
TL;DR: The practical contribution of this paper is the discussion of how blockchain can alleviate the issue of financial exclusion in rural India, thereby providing a basis for a solution that could connect rural Indians to global supply chain networks.
Abstract: The economic development of rural India requires connecting remote villages to local and global supply chains. Yet, high rates of financial exclusion inhibit rural Indians from participating in these supply networks. We review the literature on financial inclusion, adoption, and blockchain in India, and posit that to resolve financial exclusion, the four challenges of geographical access, high cost, inappropriate banking products, and financial illiteracy need to be overcome. Next, we argue that blockchain technologies hold the potential to overcome most of these challenges. However, for blockchain technologies to become the cornerstone of financial inclusion initiatives, an understanding of technology adoption in India is needed. To guide the development of such understanding, we develop a research agenda on the antecedents of adoption, adoption patterns, and outcomes of adoption. Answering these research questions will lead to a nuanced understanding of adoption of blockchain-based technologies in rural India. The practical contribution of this paper is the discussion of how blockchain can alleviate the issue of financial exclusion in rural India, thereby providing a basis for a solution that could connect rural Indians to global supply chain networks. The theoretical contribution lies in the identification of knowledge gaps that should be answered to achieve financial inclusion of rural Indians.
85 citations
[...]
TL;DR: In this article, the authors investigated the effect of financial inclusion on financial stability in the banking system and found that financial inclusion through access to payments and savings accounts has a neutral or positive effect on the financial stability.
Abstract: Expanding the reach of formal financial services to excluded individuals and businesses is a policy aim in many countries. Research to date has focused on the effect of financial inclusion on the well-being of consumers and overall development and growth. There is much less international evidence on the effect of financial inclusion on financial stability, in particular the banking system, which is the main provider of formal finance. We contend that access to financial services defined too broadly is an imprecise measure for evaluating the influence of inclusion on financial stability. We hypothesize that inclusion through access to payments and savings accounts has a neutral or positive effect on financial stability, while access to credit can weaken financial stability if credit growth occurs without due regard to borrower ability-to-repay. Using comparable cross-country data available since 2011 surveying the demand for different financial services, we find support for adverse effects on bank soundness from credit inclusion only. We also contribute new evidence on the role of the bank market structure in affecting risk-taking incentives by banks. We find that a more competitive structure intensifies the adverse impact of credit inclusion on stability.
5 citations
[...]
TL;DR: In this paper, the authors used data from the 2016 Financial Inclusion Insights (FII) program for Nigeria to present new evidence on the effects of financial inclusion on household poverty.
Abstract: In this chapter, the authors use data from the 2016 Financial Inclusion Insights (FII) program for Nigeria to present new evidence on the effects of financial inclusion on household poverty. The authors add to the discourse on the association between financial inclusion and poverty by examining alternative approaches to measuring both financial inclusion and poverty. The chapter demonstrates that an increase in multi-dimensional financial inclusion, reflecting access to banks, access to credit and access to insurance, is associated with a decline in poverty. Further analysis by the authors show that among the components of financial inclusion, access to a checking, savings or fixed deposit account is more important than access to credit and insurance in reducing poverty.
4 citations
[...]
TL;DR: In this article, a model of the levels of banking service use and the results of quantitative and qualitative research are presented in this chapter, revealing the specific nature of functioning on each of the identified levels, along with the psychological barriers relating to moving up banking levels.
Abstract: This chapter is dedicated to analysing the psychological factors that support or hinder different levels of banking (having an account, use of a payment card, and use of mobile banking). There are still many people in countries across the world who do not have a bank account or do not use payment cards, which leads to financial exclusion. Apart from the obvious reason for being unbanked resulting from infrastructure limitations (e.g., limited access to bank branches or payment terminals), there are also psychological factors that can affect the level of banking service use. A new model of the levels of banking service use and the results of quantitative and qualitative research are presented in this chapter, revealing the specific nature of functioning on each of the identified levels of banking, along with the psychological barriers relating to moving up banking levels. The barriers to having a bank account and to acceptance of cashless financial behaviours are discussed. A new concept of a Love for Cash is introduced that refers to physical money worship and strong emotional attachment to physical money. Love for Cash, next to fear of technology, was found to be one of the most important reasons for the resistance to cashless banking.
2 citations
[...]
05 Jan 2021
TL;DR: This paper examined the impact of changes in the minimum wage on employment and investment decisions in China and found that the average treatment effect on the treated via exogenous variation in minimum wage across provinces was non-parametric.
Abstract: We exploit data from the China Household Finance Survey to examine the impact of changes in the minimum wage on employment and investment decisions. We are able to non-parametrically identify the average treatment effect on the treated via exogenous variation in the minimum wage across provinces. We find that changes in the minimum wage had no adverse effects on employment (in terms of days worked per month or hours worked per work day) but found evidence that changes in the minimum wage impacted the percentage of families that had a bank account, a family in a rural area owned their home, and whether families (whose highest level of education was primary school) planned to purchase a home.
1 citations
References
More filters
Posted Content•
[...]
TL;DR: A literature review focusing on education and health in its examination of the role that households and families play in choosing how to invest the human capital of their members is presented in this paper.
Abstract: This literature review focuses on education and health in its examination of the role that households and families play in choosing how to invest the human capital of their members. The introductory section describes the history of the development of economic models of the household and reviews how theoretical developments have become linked with data collection. The second section of the report looks at the effects of income on nutritional status and the reverse influence of nutrition (health) on labor productivity (income). Despite the controversies existing in the literature and the difficulties in choosing among the array of solutions to defined problems there is little doubt that investments in education and health enhance productivity fertility child health and child educational attainment. In an attempt to shed light on the underlying mechanisms in these relationships Section 3 focuses on the estimation of reduced form demands for human capital and considers the measurement of human capital; the effects of determinants such as education household resources and community resources; endogenous program placement and selective migration; and the possible estimation bias imposed by fertility and mortality selection. Section 4 continues this investigation by considering the process underlying the production of human capital in terms of the empirical issues involved in estimation of static and dynamic production functions as well as applications to child health and applications to educational attainment. Section 5 relates labor productivity to education and considers data issues the functional form of studies ability family background and school quality. Recent developments in modeling household behavior in a dynamic setting are reviewed in Section 6 and Section 7 describes links among individuals households and families. The concluding section notes that continued integration of survey data collection with theoretical frameworks will lead to a substantial improvement in our understanding of the magnitude of the significance of the effects predicted by the theory.
1,282 citations
[...]
TL;DR: In this paper, the authors find that rainfall-induced fluctuations in income from yams are transmitted to expenditures on education and food, not to expenditures in private goods, and reject the hypothesis of complete insurance within households, even with respect to publicly observable weather shocks.
Abstract: In Cote d'Ivoire, as in much of Africa, husbands and wives farm different crops on separate plots. These different crops are differentially sensitive to particular kinds of rainfall shocks. We find that conditional on overall household expenditure, the composition of expenditure is sensitive to the gender of the recipient of a rainfall shock. For example, rainfall shocks associated with high women's income shift expenditure towards food. Social norms constrain the use of profits from yam cultivation, which is carried out by men. Correspondingly, we find that rainfall-induced fluctuations in income from yams are transmitted to expenditures on education and food, not to expenditures on private goods. We reject the hypothesis of complete insurance within households, even with respect to publicly observable weather shocks. Different sources of income are allocated to different uses depending upon both the identity of the income earner and upon the origin of the income.
623 citations
[...]
TL;DR: In this paper, the authors randomized access to noninterest-bearing bank accounts among two types of self-employed individuals in rural Kenya: market vendors and men working as bicycle taxi drivers, and found that despite large withdrawal fees, a substantial share of market women used the accounts, were able to save more, and increased their productive investment and private expenditures.
Abstract: Does limited access to formal savings services impede business growth in poor countries? To shed light on this question, we randomized access to noninterest-bearing bank accounts among two types of self-employed individuals in rural Kenya: market vendors (who are mostly women) and men working as bicycle taxi drivers. Despite large withdrawal fees, a substantial share of market women used the accounts, were able to save more, and increased their productive investment and private expenditures. We see no impact for bicycletaxi drivers. These results imply significant barriers to savings and investment for market women in our study context. (JEL D14, G21, J16, J23, O12, O14, O16)
492 citations
[...]
TL;DR: In this article, the authors used a large household data set from Guatemala to analyze how the receipt of internal remittances (from Guatemala) and international remittance (from the United States) affects the marginal spending behavior of households on various consumption and investment goods.
Abstract: The author uses a large household data set from Guatemala to analyze how the receipt of internal remittances (from Guatemala) and international remittances (from the United States) affects the marginal spending behavior of households on various consumption and investment goods. Contrary to other studies, the author finds that households receiving remittances actually spend less at the margin on consumption-food and consumer goods and durables-than do households receiving no remittances. Instead of spending on consumption, households receiving remittances tend to spend more on investment goods, like education, health, and housing. The analysis shows that a large amount of remittance money goes into education. At the margin, households receiving internal and international remittances spend 45 and 58 percent more, respectively, on education, than do households with no remittances. These increased expenditures on education represent investment in human capital. Like other studies, the author finds that remittance-receiving households spend more at the margin on housing. These increased expenditures on housing represent a type of investment for the migrant, as well as a means for boosting local economic development by creating new income and employment opportunities for skilled and unskilled workers.
414 citations
[...]
TL;DR: In this paper, a method for determining "adult" goods is described, and the procedure for detecting gender bias is applied to data from C6te d'lvoire and Thailand.
Abstract: The ability to test for discrimination in the allocation of goods between boys and girls is hampered by a lack of data on intrahousehold distribution. The analysis presented here allows inferences about intrahousehold allocation to be made from householdlevel expenditure data. For a given level of income, families with children will spend less on adult goods in order to purchase children's goods. If household purchasing favors boys over girls, smaller expenditures on adult goods would be made by families with boys as compared with those with girls. A method for determining "adult" goods is described, and the procedure for detecting gender bias is applied to data from C6te d'lvoire and Thailand. The data show no evidence of discriminatio n between boys and girls in C6te d'lvoire, and a small and statistically insignificant bias in favor of boys in Thailand. How commodities are allocated among the members of a household has recently occasioned a good deal of interest. Assessments of poverty and income distribution based on household incomes or expenditures will be misleading if allocation within the household is unequal. The position of women and girls has been of particular concern, and there is a considerable amount of empirical evidence, much of it from the Indian subcontinent, that documents discrimination against females (see in particular Bhagwati 1973; Sen 1984; Sen and Sengupta 1983; Miller 1981; Bardhan 1982; and Kynch and Sen 1983; as well as survey papers by Behrman 1987 and Harriss 1987). Much of the evidence is concerned with measurements of nutritional outcomes, mortality, and health status rather than with the direct allocation of goods by gender. The difficulty in trying to determine the intrahousehold allocation of goods is that household budget surveys, the obvious source of data, record consumption not of individuals but of households. And while attempts can be made to The author is a professor of public affairs and of economics and international affairs at Princeton University and is a consultant to the Population and Human Resources Department of the World Bank. The author thanks Dwayne Benjamin who provided for excellent research assistance. He is grateful to him and to members of the Economic Growth Center at Yale University for helpful comments. This is a revised and shortened version of Living Standards Measurement Study Working Paper 39, "The Allocation of Goods within the Household: Adults, Children, and Gender," June 1987. The results from Thailand were not included in the working paper. © 1989 The International Bank for Reconstruction and Development / THE WORLD BANK.
258 citations
Related Papers (5)
[...]
[...]