Improving Access to Banking: Evidence from Kenya

Forthcoming, Review of Finance

53 Pages Posted: 6 Oct 2020

See all articles by Franklin Allen

Franklin Allen

Imperial College London

Elena Carletti

Bocconi University - Department of Finance; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Robert Cull

World Bank - Development Research Group (DECRG)

Jun "QJ" Qian

Fanhai International School of Finance, Fudan University

Lemma W. Senbet

University of Maryland - Robert H. Smith School of Business

Patricio Valenzuela

Universidad de los Andes, Chile

Multiple version iconThere are 5 versions of this paper

Date Written: August 28, 2020

Abstract

We explore the relationship between bank branch expansion, financial inclusion and profitability for Equity Bank. Unlike traditional banks, including foreign and government owned banks in Kenya, Equity Bank targets less developed territories and less privileged households. Its presence increased financial inclusion by 31 percent of the adult population between 2006 and 2015, especially for Kenyans who were less educated, did not own their own home, and lived in less-developed areas. The bank’s business model proves to be highly effective, with branch-level profits rising in areas with a smaller number of operating banks. Overall, the growth of Equity Bank demonstrates that financial inclusion can be achieved and sustained through profitable branching and service strategies that also serve the needs of underserved regions and populations. Thus, financial inclusion need not come at the sacrifice of bank profitability.

Keywords: Equity Bank, financial access, bank penetration, bank account, microfinance

JEL Classification: G2; O1; R2

Suggested Citation

Allen, Franklin and Carletti, Elena and Cull, Robert and Qian, Jun and Senbet, Lemma W. and Valenzuela, Patricio, Improving Access to Banking: Evidence from Kenya (August 28, 2020). Forthcoming, Review of Finance, Available at SSRN: https://ssrn.com/abstract=3688708

Franklin Allen (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Elena Carletti

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Robert Cull

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-6365 (Phone)
202-522-1155 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/rcull

Jun Qian

Fanhai International School of Finance, Fudan University ( email )

Shanghai
China
86-21-63895501 (Phone)
86-21-62934572 (Fax)

HOME PAGE: http://www.fisf.fudan.edu.cn/show-65-69.html

Lemma W. Senbet

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States
301-405-2242 (Phone)
301-405-0359 (Fax)

Patricio Valenzuela

Universidad de los Andes, Chile ( email )

Mons. Álvaro del Portillo
Las Condes
Santiago, 12.455
Chile

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