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Financial Inclusion: Identifying cost to clients Damola Owolade, Christian Tipoy and Gerhard Coetzee Centre for Inclusi

Financial Inclusion: Identifying cost to clients Damola Owolade, Christian Tipoy and Gerhard Coetzee Centre for Inclusive Banking in Africa. Outline. Dimensions of cost to client

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Financial Inclusion: Identifying cost to clients Damola Owolade, Christian Tipoy and Gerhard Coetzee Centre for Inclusi

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  1. Financial Inclusion: Identifying cost to clientsDamola Owolade, Christian Tipoy and Gerhard CoetzeeCentre for Inclusive Banking in Africa

  2. Outline • Dimensions of cost to client • Empirical demand side analysis using FinScope data 2007, 2008 & 2009 (to assess consistency in results and robustness) • Modelling access to formal financial products in terms of income, price and non-economic variables given data availability • Discussion of statistically “meaningful” results • Policy recommendations and conclusions

  3. Descriptors of access used in analysis • Components of FSM • Physical Access Index • Financial Knowledge & Control Index • Financial Discipline Index • Connectedness and Optimism Index • Education • Income • Formal Employment • Gender • Age • Race • Provinces • Geographical Area

  4. Salient aspects

  5. Discussion of results • PAI, FKCI and FDI will affect the price paid and are consistent over the years • Education at tertiary level is also consistently relevant over the years • Formally employed, income, race, age category between 16 and 24 • Variables likely to affect cost to client not empirically proven (supply side factors) • Level of competition • Compliance/Regulatory costs • Enabling environment

  6. Recommendations Livelihood strategies support Social grants have to be maintained to leverage livelihoods Electronic disbursement of social grants – role of branchless banking Education and also financial education The enabling environment for fostering innovation and technological advancement. Improved competition Addressing the “Regulators Dilemma”

  7. Concluding remarks South Africans use more than one financial product at a given time which is often a mix of formal and informal supplied financial products (see also Portfolios) More technically, perhaps look into the joint determinants of being served in the formal and the informal financial sectors That would help to explain the ebb and flow between banked and unbanked as the economy changes

  8. Thank you

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