Improving Access to Banking: Evidence from Kenya
By Franklin Allen, Elena Carletti, Robert J. Cull, J. Qian, Lemma W. Senbet, Patricio Valenzuela. 2013
132 citations recorded by the source corpus.
Using household surveys and bank penetration data at the district-level in 2006 and 2009, this paper examines the impact of Equity Bank -- a leading private commercial bank focusing on microfinance -- on access to banking in Kenya. Unlike other commercial banks in Kenya, Equity Bank pursues distinct branching strategies that target underserved areas and less-privileged households. Equity Bank presence has a positive and significant impact on households' use of bank accounts and bank credit, especially for Kenyans with low income, no salaried job, and less education and those who do not own their own home. The findings are robust to using the district-level proportion of people speaking a minority language as an instrument for Equity Bank presence. It appears that Equity Bank's business model -- providing financial services to population segments typically ignored by traditional commercial banks and generating sustainable profits in the process -- can be a solution to the financial access problem that has hindered the development of inclusive financial sectors in many African countries.
Subfields: Accounting, Economics and Econometrics, Management Information Systems
View Paper: https://www.semanticscholar.org/paper/c2027790f0ab6ee6659c5dbbe73dd4fc0d611337
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Accounting
In Economics and Econometrics
Citations in the corpus
- The African Financial Development and Financial Inclusion Gaps (2014, unknown): “For example, our own recent research on Kenya shows how Equity Bank’s branching expansion to underserved areas and a strategy to attract minority-speaking clients by communicating with them in their native tongue brought about substantial increases in the probability of having a bank account (5-10 p”
- Resolving the African Financial Development Gap: Cross-Country Comparisons and a Within-Country Study of Kenya (2012, unknown): “Fortunately, we are able to overcome that challenge using a new dataset on bank branch penetration at the district-level described in Allen et al. (2011), matched with household surveys of financial usage for Kenya that were conducted in 2006 and 2009.”
- Is financial inclusion good for bank stability? International evidence (2017, background): “…while most of the empirical papers assess the effect of financial inclusion on various socio-economic indicators (e.g., Butler and Cornaggia, 2011; Allen et al., 2013; Demirgüç-Kunt et al., 2013a; Demirgüç-Kunt et al., 2013b), or use disaggregated single indicator of financial inclusion…”
- Banking in Africa (2013, unknown): “Population density is also more closely linked to bank branch penetration in Africa than in other developing economies, and both are more strongly linked to firm-level access to external finance in Africa than elsewhere (Allen et al., 2012b).”