Eliminating Entry Barriers for the Provision of Banking Services: 'Banking Correspondents' in Brazil

Juliano Assunção
Publication Type: 
Papers
Journal Name: 
Journal of Banking and Finance
Journal Volume: 
37
Journal Number: 
8
Pages: 
2806-2811
Publication Year: 
2013

This paper shows that the contractual arrangement of `banking correspondents' has eliminated entry barriers for the provision of banking services. The evidence is based on the estimation of an entry model of financial providers in Brazilian municipalities. I estimate a zero population entry threshold for banking correspondents for the period from 2002 to 2007. The estimated population entry thresholds for bank branches in the same period are relatively stable at approximately 8,000 to 9,000 people. The population entry thresholds for the second to fifth players for banking correspondents are also consistently lower than those for bank branches.

JEL Codes: 
G20, O16
Region: 
Latin America/Caribbean
Country: 
Brazil
Topic: 
Financial Institutions
Topic: 
Mobile Financial Services
Topic: 
Economic Modeling