APEC and Financial Exclusion: Missed Opportunities For Collective Action

This paper examines the circumstances in which 'financial exclusion' has been recognized by the Asia-Pacific Economic Cooperation process (APEC).The paper highlights that financial exclusion:

• Is a general problem in the developing member economies due to the inability of lower-income households to meet lenders' requirements for formal physical collateral;
• Exists in the developed member nations because privatization and rationalization have led to the withdrawal of conventional financial institutions from particular geographic areas or demographic categories.

The paper suggests that microbanking institutions should:

• Contribute to the process of financial deepening through extension of savings facilities to millions of poor householders;
• Play an important role in increasing the productivity and profitability of microenterprises by funding their capital requirements.

Finally the author states that:

• Microfinance is a subset of microbanking that is applicable to the developing economies; it is not a solution to the generalized problem of financial exclusion;
• Mexico has made a promising beginning by introducing issues of microbanking and microenterprise development to the APEC agenda;
• By focusing APEC's attention on 'specialized financial institutions', Thailand stopped the positive momentum of the Mexican 'push' for the elimination of financial exclusion.