formal financial institution: in Sub-Saharan Africa 19 percent of adults report having saved in the past year using a savings club or person outside the family. But a large share of adults around the world who report having saved or set aside money in the past 12 months do not report having done so using a formal financial institution, informal savings club, or person outside the family. These adults account for 29 percent of savers worldwide and more than half of savers in 55 economies.

Analysis of Global Findex data shows that account penetration is higher in economies with higher national income as measured by GDP per capita, confirming the findings of previous studies.<sup>3</sup> But national income explains much less of the variation in account penetration for low- and lower-middle-income economies. Indeed, at a given income level and financial depth, use of financial services varies significantly across economies, suggesting a potentially important role for policy.

# **Removing physical, bureaucratic, and financial barriers could expand the use of formal accounts**

Poor people juggle complex financial transactions every day and use sophisticated techniques to manage their finances, whether they use the formal financial system or not.<sup>4</sup> We cannot assume that all those who do not use formal financial services are somehow constrained from participating in the formal financial sector—access and use are not the same thing. But the recent success of mobile money in Sub-Saharan Africa shows that innovations can bring about dramatic changes in how people engage in financial transactions. To allow a better understanding of the potential barriers to wider financial inclusion, the Global Findex survey includes novel questions on the reasons for not having a formal account. The responses can provide insights into where policy makers might begin to make inroads in expanding the use of formal financial services.

Worldwide, by far the most common reason for not having a formal account— cited by 65 percent of adults without an account—is lack of enough money to use one. This speaks to the fact that having a formal account is not costless in most parts of the world and may be viewed as unnecessary by a person whose income stream is small or irregular. Other common reasons reported for not having an account are that banks or accounts are too expensive (cited by 25 percent of adults without a formal account) and that banks are too far away (cited by 20 percent).

The self-reported barriers vary significantly across regions as well as by individual characteristics. Among adults without a formal account, those in Sub-Saharan Africa and Latin America and the Caribbean are the most likely to cite missing documentation as a reason for not having one. Those in Europe and Central Asia have the least trust in banks. Women tend to report using someone else’s account significantly more than do men, highlighting the challenges that women may encounter in account ownership. Adults who report having saved, but not using a formal account to do so, are significantly more likely to cite distance, cost, and paperwork as barriers to having a formal account.

**3**

MEASURING FINANCIAL INCLUSION