How equitable is access to finance in Turkey? Evidence from the latest Global FINDEX

Access to finance is an important tool against poverty since it allows for the smoothing of consumption. The equality of access amongst different groups in the society is also crucial in terms of correctly allocating the positive benefits of improved financial services.

In a recent paper published in the World Bank Policy Research Working Paper Series we proposed and computed an Equity Adjusted Coverage rate (EACR) for a range of financial inclusion indicators in Turkey. This work complements the conventional coverage or use of financial services by adjusting for the equity of its coverage, on the basis of a set of `circumstances. The characteristics or circumstances that are accounted for, in Turkey’s case, are gender, age, education, income quintile, and urban/rural.

Bank Account Use

The FINDEX database shows that 57.6 percent of individuals (aged 15+) in Turkey had a bank account (coverage rate) in 2011 (Figure below). However, when adjusted for the inequality of the access among the above mentioned characteristics, this coverage rate is penalized, and drops down to 44.0 percent. In 2014, Turkey’s coverage rate decreased slightly but the EACR actually improved to 48.3, mostly driven by an improvement of gender equality between 2011 and 2014.


Unlike Brazil, Turkey’s dissimilarity in account ownership is driven by gender. A Shapley decomposition measures the contribution of each circumstance onto the dissimilarity index. In 2011, the coverage in Turkey was 57.6 and 55.9 in Brazil. However, the level of dissimilarity, and what accounts for the dissimilarity is very different between the two countries. Turkey’s dissimilarity is 8 percentage points higher than Brazil at 23.7, resulting in a lower overall EACR for bank account ownership in Turkey. Moreover, 58.4 percent of the dissimilarity is due to gender in Turkey, compared to only 8.8 percent in Brazil. In Brazil, the main sources of inequality are age and income.

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Between 2011 and 2014, Turkey was able to substantially decrease the contribution of gender in its dissimilarity of bank account usage. Contribution of gender on the d-index fell from 58.4 to 39.4 over the three years. The overall decrease in the level of dissimilarity was mainly driven by this improvement in the gender component as the absolute contribution of gender on dissimilarity fell from 13.8 in 2011 to 5.7 in 2014. However, gender continues to be the largest source of dissimilarity suggesting that the continuation of this positive trend in gender equity is crucial in further increasing the EACR of Turkey in terms of bank account ownership.


Overall savings and savings in financial institutions

Turkey is among the countries with the lowest savings rates, both at the individual and the household level. In the FINDEX database, Turkey ranks the fifth lowest in the world among 145 countries, with 9.6 percent of individuals reporting that they save in 2011. In terms of individuals saving at a formal financial institution, Turkey is also near the bottom of the global distribution at 9.1 percent in 2014.  Moreover, the amount of savings differs amongst income groups in Turkey. Individuals in the highest income quintile are almost three times more likely to save than the members of the lowest quintile. This disparity amongst the bottom and top quintile groups is parallel with varying account usage levels across Turkey.

Turkey’s performance in financial inclusion demonstrates that the country has been successful in spreading the use of financial tools at a broad level. However, there are continuing challenges in terms of the equitable distribution of financial access and awareness in using a robust combination of financial instruments. By promoting more savings, and ensuring that all parts of the society have access to formal institutions, Turkey can boost the financial security of its citizens. In this respect, the recent progress from a gender equality perspective can be seen as encouraging progress that must be built on going in to the future.

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Savings at a Financial Institution EACR (Individual level, FINDEX 2014)

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