Access to credit: The difficulties of households

Abstract

This chapter examines the issues concerning the access to credit by households and focuses on the difficulties encountered by certain societal groups in obtaining credit from mainstream institutions, such as banks and other regulated financial intermediaries. In recent years, concern for the inability to access mainstream credit or the inability to find credit at conditions and terms that suit the specific needs/features of certain households - especially those living on low income and with a poor financial culture - has grown in almost all financial developed countries (FSA, 2000; Gardener et al. 2005; Byrne et al. 2005; Anderloni, 2003, Kempson and Whiley, 1999, Caskey, 2002). Credit represents the main solution for bridging the gap between financial inflows - deriving mainly from income - and financial outflows, generated by everyday expenses, the purchase of durable consumer goods and of the house itself. Many households are also the owners and managers of a micro-enterprise and use credit to finance it. Thus, the lack of credit may hinder the start up and the development of a business and may prevent individuals from reaching higher living standards. The attention for the issue of credit access is justified not only by its economic and social significance, but also because of high-profile initiatives undertaken in many developing countries that have led to the establishment of financial intermediaries dedicated especially to those people who are usually rejected from mainstream financial institutions. © Springer-Verlag Berlin Heidelberg 2007.