In Brazil, bank customers can access their accounts aboard a floating bank on the Amazon River. In Mexico, rural residents find banking services inside popular stores like Walmart or 7-Eleven, or at their local pharmacy.
Mobile technology and regulatory reforms have made it easier and cheaper for private and public companies around the world to offer banking services to the poor, youth, women and rural residents, and others who lacked access.
But in a new report released on Monday, the World Bank warns that while some services, like low-fee accounts, clearly benefit the poor and small firms, others - such as microcredit, microinsurance, and debt relief - can do more harm than good.
"We're very careful to make sure we're not saying that everyone should be borrowing," said Asli Demirguc-Kunt, the World Bank's director of research and co-author of the report.
But several studies in recent years have shown that microcredit, which often comes with very high interest rates, has little or no impact on the financial fates of people in nations such as Mexico, the Philippines, Morocco and India.
The World Bank said India in particular offers a cautionary tale about the overextension of credit, after reports of dozens of suicides by poor borrowers in 2010 in the southern state of Andhra Pradesh.
Source: Reuters
