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Institute for Economies in Transition, Bank of Finland BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland

No 10/2014:
Understanding financial inclusion in China

Zuzana Fungácová () and Laurent Weill ()

Abstract: We use data from the World Bank Global Findex database for 2011 to analyze financial inclusion in China, including comparisons with the other BRICS countries. We find a high level of financial inclusion in China manifested by greater use of formal account and formal saving than in the other BRICS. Financial exclusion, i.e. not having a formal account, is mainly voluntary. The use of formal credit is however less frequent in China than in the other BRICS. Borrowing through family or friends is the most common way of obtaining credit in all the BRICS countries, but other channels for borrowing are not very commonly used by individuals in China. We find that higher income, better education, being a man, and being older are associated with greater use of formal accounts and formal credit in China. Income and education influence the use of alternative sources of borrowing. Overall financial inclusion does not constitute a major problem in China, but such limited use of formal credit can create a challenge for further economic development.

Keywords: financial inclusion; financial institutions; China; (follow links to similar papers)

JEL-Codes: G21; O16; P34; (follow links to similar papers)

28 pages, April 8, 2014

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This paper is published as:
Fungácová, Zuzana and Laurent Weill, (2015), 'Understanding financial inclusion in China', China Economic Review, Vol. 34, July, pages 196-206

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