In some countries it can take years to get a new telephone line installed. In 1990, there were just 10 telephone lines installed for every 1000 people in the Philippines. In Kenya, the ratio was 7 per thousand. In India, 6 per thousand. Compare that with the United Kingdom with 441 lines per thousand in 1990, or the United States with 545. For decades, public sector telephone companies in developing economies seldom had incentives or budgets to rapidly expand land line networks, and the private sector has had even less motivation to serve the costly-to-reach.
April 2007
By Mudit Kapoor, Jonathan Morduch, and Shamika Ravi
From Microfinance to m-Finance
In some countries it can take years to get a new telephone line installed. In 1990, there were just 10 telephone lines installed for every 1000 people in the Philippines. In Kenya, the ratio was 7 per thousand. In India, 6 per thousand. Compare that with the United Kingdom with 441 lines per thousand in 1990, or the United States with 545. For decades, public sector telephone companies in developing economies seldom had incentives or budgets to rapidly expand land line networks, and the private sector has had even less motivation to serve the costly-to-reach.
Why do so many poor households lack access to finance? Are the unbanked creditworthy? Largely not interested in borrowing? The answers are at the heart of ongoing debates around the deepening of financial systems We examine household-level data from 1438 households in six provinces in Indonesia. All households, whether or not they were presently borrowing, were assessed by bank professionals to judge creditworthiness. About 40 percent of poor households were judged creditworthy, but only 14 percent had recently borrowed. Possessing collateral was a minor determinant of creditworthiness. Despite depictions of widespread pent-up demand for loans, about half of creditworthy poor households report being averse to taking on debt. Loans for small business were desired, but respondents often highlight broader household needs, including paying for school fees, medical treatment, and home repair.
March 2007
By Don Johnston, Jr. and Jonathan Morduch
The Unbanked: Evidence from Indonesia
Why do so many poor households lack access to finance? Are the unbanked creditworthy? Largely not interested in borrowing? The answers are at the heart of ongoing debates around the deepening of financial systems We examine household-level data from 1438 households in six provinces in Indonesia. All households, whether or not they were presently borrowing, were assessed by bank professionals to judge creditworthiness. About 40 percent of poor households were judged creditworthy, but only 14 percent had recently borrowed. Possessing collateral was a minor determinant of creditworthiness. Despite depictions of widespread pent-up demand for loans, about half of creditworthy poor households report being averse to taking on debt. Loans for small business were desired, but respondents often highlight broader household needs, including paying for school fees, medical treatment, and home repair.
