Innovating financial inclusion: postal savings system revisited

Date published: September 5, 2016
Downloads: 83 Publisher: Asian Development Bank Institute

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Mobilizing domestic financial resources like savings is crucial for Asia’s developing economies. Savings are important because they permit investment, which in turn increases the productive capacity of an economy. They also play a significant role in financial intermediation in a sense that savings funds intermediated by the banking system can be used as credit to finance development activities. Unfortunately, due to different levels of financial sector development, access to financial services such as credit, savings, and payment services remain limited in developing Asia. For example, only 36% of adults in East Asia and the Pacific have formal savings accounts and 11% have access to formal credit, as of 2014. Against this reality, Asia needs to explore other strategies and to improve financial access. In this regard, the role of the postal network is crucial. With more than 600,000 branches worldwide, post offices provide alternative infrastructure to rural populations to access a wide range of financial services that traditional financial institutions cannot provide. Considering the potential of post offices to expand financial services in rural areas, the development of a postal savings system may be a good strategy for developing Asian countries to increase financial inclusion, reduce poverty, and achieve higher economic growth.

By Aladdin D. Rillo and Jeffrey Miyamoto