2.3.1 The share of adults borrowing formally remains low in developing countries

MAP 2.3.1 The share of adults borrowing formally remains low in developing countries

Adults borrowing any money from a financial institution or through the use of a credit card or mobile money account in the past year (%), 2021

Source: Global Findex Database 2021.

Formal borrowing using credit cards dominated in high-income economies and is growing in developing economies

In high-income economies, the dominant way to borrow was by credit card, which is both a payment instrument and a source of credit. Credit cards provide short-term credit whenever they are used, even when credit card holders pay their balance in full each statement cycle and thus pay no interest on that balance. The introduction of credit cards in an economy might therefore have affected the demand for and use of short-term credit. In high-income economies, 51 percent of adults used a credit card in the past 12 months. Among those who reported borrowing formally, about one-third borrowed from a formal financial institution or mobile money provider, whereas two-thirds borrowed using a credit card but not from a financial institution or mobile money provider (figure 2.3.3). In developing economies, despite continuing growth in credit card use, on average only 14 percent of adults reported having used one. Exceptions were China, as well as Russia, Türkiye, and Ukraine in Europe and Central Asia, and Argentina and Brazil in Latin America and the Caribbean. In these economies, the share of adults borrowing by using a credit card, but not through a loan from a financial institution or mobile money provider, ranged from close to 40 percent in the three economies in Europe and Central Asia, about 50 percent in China, and about 60 percent in the two economies in Latin America and the Caribbean.

Most users paid off their credit card balance each month To better understand practices around paying off credit card balances, the Global Findex 2021 survey asked for the first time whether adults who used a credit card paid off all their balances in full by the due date. In high-income economies, on average, 85 percent of adults who used a credit card paid off their balances in full (figure 2.3.4). In the six developing economies in which the share of credit card users exceeds 20 percent, payment patterns varied. In China, 90 percent of credit card users paid off their balances in full, while in Argentina and Brazil, 72 percent did so. In Russia, Türkiye, and Ukraine, about 60 percent did so. In both high-income and developing economies, some adults own a credit card, but they have not used it in the past 12 months.