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Usage of Financial Services in South Africa: Perceptions Matter

Author

Listed:
  • Kostov, Philip

    (University of Central Lancashire)

  • Arun, Thankom Gopinath

    (University of Essex)

  • Annim, Samuel

    (University of Cape Coast, Ghana)

Abstract

This study investigates the access to and usage of financial services in South Africa. Financial services are categorised in three types namely; general accounts and services, investment/savings and insurance/assurance. Taking into account the interactions between usage of different types of financial services, we use multivariate simultaneous probit specification to examine the effect of financial perception. Our results suggests that after controlling for endogeneity of choices and a range of control variables, financial perceptions are robust determinant of access to financial services. The impact of financial perception however reduces and gradually disappears as one moves up the financial access ladder towards more advanced financial products and services. In a policy context, targeting demand-side factors to increase access to and use of financial services is advisable. This targeting however can only be successful if it is tuned to specific basic financial services and products.

Suggested Citation

  • Kostov, Philip & Arun, Thankom Gopinath & Annim, Samuel, 2013. "Usage of Financial Services in South Africa: Perceptions Matter," IZA Discussion Papers 7687, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7687
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    References listed on IDEAS

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    3. Kon, Y & Storey, D J, 2003. "A Theory of Discouraged Borrowers," Small Business Economics, Springer, vol. 21(1), pages 37-49, August.
    4. Shawn Cole & Thomas Sampson & Bilal Zia, 2011. "Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets?," Journal of Finance, American Finance Association, vol. 66(6), pages 1933-1967, December.
    5. Philip Kostov & Thankom Arun & Samuel Annim, 2012. "Determinants of Access to Finance: An Investigation into the Mzansi Intervention," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 24(3), pages 397-412, July.
    6. Levenson, Alec R & Willard, Kristen L, 2000. "Do Firms Get the Financing They Want? Measuring Credit Rationing Experienced by Small Business in the U.S," Small Business Economics, Springer, vol. 14(2), pages 83-94, March.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    financial; perception; behaviour; general accounts; investment; insurance; South Africa;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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