Microfinance Banks and Financial Inclusion

57 Pages Posted: 1 Mar 2013 Last revised: 12 Nov 2014

See all articles by Martin Brown

Martin Brown

University of St. Gallen

Benjamin Guin

Bank of England

Karolin Kirschenmann

Centre for European Economic Research (ZEW)

Date Written: November 02, 2014


We examine how the geographical proximity to a new microfinance bank branch affects the use of bank accounts by low-income households. We study the expansion of the branch network of ProCredit banks in South-East Europe between 2006 and 2010. The analysis is based on household-level survey data and bank-branch location data which are matched on geographic coordinates. We control for trends in local economic activity with satellite data on night light intensity. We report three main findings: First, ProCredit is more likely to open a new branch in areas with a large share of low-income households. Second, in locations where ProCredit opens a new branch the share of banked households increases more than in locations where it does not open a new branch. Third, the impact of a new ProCredit branch on the use of bank accounts is stronger among low- and middle-income households than among high-income households, but also among older households which rely on transfer income. Our results suggest that microfinance banks can promote financial inclusion even in emerging markets which are well served by retail banks.

Keywords: Access to finance, Microfinance, Bank-ownership, Mission drift

JEL Classification: G21, L2, O16, P34

Suggested Citation

Brown, Martin and Guin, Benjamin and Kirschenmann, Karolin, Microfinance Banks and Financial Inclusion (November 02, 2014). Available at SSRN: https://ssrn.com/abstract=2226522 or http://dx.doi.org/10.2139/ssrn.2226522

Martin Brown (Contact Author)

University of St. Gallen ( email )

Unterer Graben 21
St. Gallen, CH-9000

Benjamin Guin

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Karolin Kirschenmann

Centre for European Economic Research (ZEW) ( email )

+496211235351 (Phone)

Register to save articles to
your library


Paper statistics

Abstract Views
PlumX Metrics