Reserve Bank of New Zealand analyses market failures behind barriers to Māori access to capital

The Reserve Bank of New Zealand has published a Bulletin article examining barriers Māori face in accessing capital, linking these gaps to market failures or imperfections that largely reflect information failures and asymmetries. The Bank frames the issue as contributing to ongoing financial exclusion and as potentially weakening the financial system’s ability to allocate capital efficiently. The article highlights Māori-specific barriers including legislative constraints that make it difficult to use Māori land as loan collateral, and low trust and awareness between Māori and banks. It also notes that Māori are more likely to live in rural areas and therefore encounter market failures common in rural credit markets. The Bank reviews initiatives intended to close information gaps and improve access to finance, including better data collection, cultural training and financial literacy programmes, as well as steps to facilitate lending on Māori land and develop tailored bank products, although uptake remains low. While the Māori economy has grown and financing gaps between Māori and non-Māori appear to be narrowing, the Bank identifies improved data, financial system innovation, anti-money laundering and countering financing of terrorism (AML/CFT) reforms, and further legislative change as potential avenues to ease barriers. The research builds on the Bank’s 2022 “Improving Māori Access to Capital” issues paper and is presented as part of its work under the Financial Policy Remit and the 2024 Letter of Expectations.