BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
Understanding financial inclusion in China
() 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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