Determinants of access to finance : an investigation into the Mzansi intervention

This article aims to understand low-income household's latent behaviour in decision making around accessing financial services. We analyse the determinants of choice surrounding the pre-entry level bank account, Mzansi, by consumers in South Africa. Removing barriers to accessing finance should arguably generate large beneficial effects for low-income households, whereby the Mzansi account functions as the first step on the financial ladder for the previously unbanked. However, while previous research has focused primarily on supply-side barriers to accessing finance, based on assumptions that demand-side barriers are non-existent, we question this assumption and identify consumers’ financial perceptions and attitudes as a significant influence in determining demand for financial services among low-income households. Consequently, we argue that removing supply side constraints on its own is insufficient as a means to expand access to finance in developing countries. [authors abstract]