Banking the Unbanked: What Do 255 Million New Bank Accounts Reveal about Financial Access?
76 Pages Posted: 30 Jan 2017 Last revised: 13 Nov 2017
Date Written: October 26, 2017
Using administrative account level data, we study the largest financial inclusion program in India that led to 255 million new bank account openings. About 77% of these accounts maintain a positive balance. While the initial usage remains quite infrequent, it gradually converges to that of banked households with similar demographics. Exploiting regional variation in ex-ante financial access, we find that regions more exposed to the program saw an increase in lending and defaults on new loans. These results are consistent with banks catering to the new demand for formal credit by previously unbanked households. We also find some evidence of increased borrowing and spending for health related reasons in regions more exposed to the program.
Keywords: Banking, Financial Inclusion, Financial Literacy, Big Data, Financial Access, Savings, Spending, Debit Card, Consumer Finance, Household Finance
JEL Classification: C93, D14, G21, O16, O12
Suggested Citation: Suggested Citation