Saving: role of financial inclusion

Question 1

Paper done by?

Answer 1

Guariglia et al 2016

Question 2

Define financial inclusion? 2 effects of it?

Answer 2

Access, availability and use of formal financial services to all members of an economy at affordable prices

boosts economic growth and decreases inequality/poverty

Question 3

3 stylized facts regarding role of financial inclusion?

Answer 3

1) unbalanced economy and high saving rate
2) unbalanced use of financial services
3) China is characterized by a massive use of informal finance

Question 4

3 stats showing ‘unbalanced economy and high saving rate’?

Answer 4

2013 - investment is 50% of GDP, private consumption only 36%, average HH saving rate 38%

Question 5

See notes

Answer 5

‘unbalanced use of financial services’

Question 6

2 stats to back up ‘China is characterized by a massive use of informal finance’?

Answer 6

33% have at least one informal loan but only 15% have a formal loan

Question 7

See

Answer 7

literature review bit

Question 8

3 determinants of financial inclusion?

Answer 8

Political connections, social networks and economic literacy

Question 9

2 general determinants of financial inclusion?

Answer 9

Wealth of countries, gender/age/education of individual

Question 10

Explain how informal and formal financing can be either complements or subsititutes?

Answer 10

Complements: informal financing may serve as collateral for formal financing

Subs: Informal may reduce the need for formal financing

Question 11

2 hypotheses?

Answer 11

H1) Informal finance is a complement to LT financial services, but a substitute to other financial services

H2) Financial inclusion is negatively associated with household savings

Question 12

What data was used?

Answer 12

2011 Cina household finance survey (CHFS) on roughly 8000households

Question 13

4 indicators of financial inclusion that were used?

Answer 13

• ownership of account
• ownership of credit card
• possession of bank loans
• combined indicator based on other 3

Question 14

2 indicators of saving?

Answer 14

• saving dummy variable=1 if respondent saves

- savratio=S/Y

Question 15

4 observations regarding savings rates and financial inclusion, comparing urban and rural?

Answer 15

1) urban households have higher overall level of wealth
2) saving ratio rural: 33.6% and urban: 66.2%
3) % with positive savings ratio rural: 63.9% and urban: 66.2%
4) 42% of rural households have informal loans but only 27.7% of urban households do