The use of personal credit—in the form of credit cards, personal loans, and automobile loans—has always been low in Asia. It fell even further when the financial crises of 1997 caused banks to rein in their lending, leading to a drastic reduction in the level of outstanding consumer debt in many Asian markets. Is credit use likely to remain limited in the region? Perhaps not, according to a survey probing the way its people use personal financial services. This research also points to the existence of a very real opportunity for financial institutions.

In banking circles, Asian consumers are thought to be more averse to borrowing than are their Western counterparts. Indeed, there is much evidence to support the perception that Asians are credit shy. Asked if it was unwise to borrow money except to buy a house, 47 percent of mid- and high-income respondents in the areas surveyed (China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand) agreed, compared with 43 percent two years ago (Exhibit 1). Throughout Asia the penetration of almost all consumer credit products has been consistently far below US levels (Exhibit 2).

Probe more deeply, though, and it becomes...