Which Households Use Banks? Evidence From the Transition Economies

41 Pages Posted: 5 Mar 2011

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Martin Brown

University of St. Gallen

Date Written: February 14, 2011

Abstract

This paper uses survey data for 29,000 households from 29 transition economies to explore how the use of banking services is related to household characteristics, bank ownership structure and the development of the financial infrastructure. At the household level we find that the holding of a bank account or bank card increases with income, wealth and education in most countries and also find evidence for an urban-rural gap, as well as for a role of religion and social integration. Our results show that foreign bank ownership is associated with more bank accounts among high-wealth, high-income, and educated households. State ownership, on the other hand, does not induce financial inclusion of rural and poorer households. We find that higher deposit insurance coverage, better payment systems and creditor protection encourage the holding of bank accounts in particular by high-income and high-wealth households. All in all, our findings shed doubt on the ability of policy levers to broaden the financial system to disadvantaged groups.

Keywords: Access to finance, Bank-ownership, Deposit insurance, Payment system, Creditor protection

JEL Classification: G2, G18, O16, P34

Suggested Citation

Beck, Thorsten and Brown, Martin, Which Households Use Banks? Evidence From the Transition Economies (February 14, 2011). ECB Working Paper No. 1295. Available at SSRN: https://ssrn.com/abstract=1761435

Thorsten Beck (Contact Author)

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Martin Brown

University of St. Gallen ( email )

Unterer Graben 21
St. Gallen, CH-9000
Switzerland

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