COMCEC Financial Outlook 2018

on the expected quality of the project and entrepreneur, not on the accumulated wealth and

social connections of the entrepreneur.

A well-functioning financial system that overcomes market frictions will more effectively

provide financial services to a wide range of firms and households, not just large companies and

rich individuals. Thus, to develop informative proxies of financial development, it is useful to

move beyond financial depth and also include indicators of financial access—the degree to

which the public can access financial services.’

A common proxy variable of access to financial institutions is the number of bank accounts per

1,000 adults. Other variables in this category include the number of bank branches per 100,000

adults (commercial banks), the percentage of firms with a line of credit. When using these

proxies, the following points should be kept in mind on their weaknesses:

The number of bank branches is becoming increasingly misleading with the move towards

branchless banking. The number of bank accounts does not suffer from the same issue, but it has

its own limitations (in particular, it focuses on banks only, and does not correct for the fact that

some bank clients have numerous accounts)

Bank account per 1,000 adults

is one of the main indicators of access to financial services that

refers to ‘the number of depositors with commercial banks per 1,000 adults’. As a result of the

underdeveloped nature of economic and financial markets as well as low level of financial

inclusion, this level for low income group countries has been lagging behind the world averages

significantly.

While the world average was recorded as 789 in 2016, the OIC-LIG was realized as 141 in the

same year. The level of bank accounts opened by adults in OIC-HIG and OIC-UMIG countries,

which have exceeded the world averages significantly, recorded as 1,120 and 1,031 respectively.

This indicates that there is a close correlation between economic growth, income level and

banking activities in a particular country.

Figure 4: Bank Accounts per 1,000 Adults

Source: Authors’ calculation from the World Bank Database

Cihak, M., Demirgüç-Kunt, A. “Benchmarking Financial Systems Around The World 2012, World Bank”

200

400

600

800

1.000

1.200

OIC-LIG

OIC-LMIG OIC-UMIG

OIC-HIG OIC-Average World Average

2012 2013 2014 2015 2016