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Financial Sector

Want to empower women? Digital Financial Services are the way to go!

Duncan Green's picture

Sophie Romana (left) and Shelley Spencer (right) report back from the June 8 high level roundtable organized by NetHope and USAID, which brought together mobile banking and gender champions to reflect on how Digital Financial Services (DFS) can galvanize women’s empowerment.

Women’s empowerment is often measured by their access to resources and ability to make decisions over how they are used.  Recent evidence shows that DFS delivered through mobile phones deserves solid A's against each metric. This is not just hopeful musing by us as two empowered women with banking apps on our mobile phones, it is the consensus of a cross section of thought leaders with a seat at the table in Washington including USAID, the Bill & Melinda Gates Foundation, the Better than Cash Alliance and UNCDF, CGAP, and Women for Women International, as well as our own organizations, Oxfam and NetHope.  We recently spent a morning reflecting on rigorous academic and implementation research on DFS use by women — all to be published soon — and pathways to close the gender gap in DFS product use.

Oxfam has long known that women play a central role in financing family and community needs. What we are now finding is that DFS tools can enhance their role.  To study the impact of DFS on Saving for Change (SfC) savings groups in Senegal, Oxfam divided up 210 SfC groups (over 5,000 women) into 2 cohorts: one who participated in the project and the other as a comparison set.  Women who participated in the pilot saved and borrowed more than the comparison groups. The differences are not marginal.  There is a significant difference in savings.

Graphs: Saving for Change Mobile Banking, First Assessment & Learning Review, March 2016, Oxfam America

Banking consolidation in the GCC requires attention to competition

Pietro Calice's picture
Also available in: Arabic | French
National Bank of Abu Dhabi - Ijanderson977 (Own work) [Public domain], via Wikimedia Commons
National Bank of Abu Dhabi, UAE. Photo: Wikimedia Commons

Gulf banking markets may have entered an important phase of consolidation, with the potential to dramatically reshape both the role and the intermediation capacity of the industry. A few days ago, two large banks in the UAE, National Bank of Abu Dhabi and First Gulf Bank, agreed on a tie-up to create a national champion and regional powerhouse with $170 billion in total assets. In Oman, Bank Sohar and Bank Dhofar are in advanced merger talks. Bank mergers are expected to take place in Bahrain and Qatar as well.

The protracted downward trend in oil prices is threatening economic growth and fiscal sustainability in the region. This is having an impact on the banking systems. Banks are increasingly facing pressure on liquidity in the face of both private and public deposit outflows. This coupled with a low interest rate environment in the context of pegged currencies is eroding margins. Capital buffers are strong yet asset quality may deteriorate if oil prices remain low for a prolonged period and economic growth decelerates further. Therefore, in a context largely characterized by fragmented markets, consolidation may help achieve efficiency gains and ultimately preserve financial stability.

However, it is important that banking consolidation in the Gulf does not come at the detriment of competition. International experience shows that healthy bank competition generally promotes access to finance and improves the efficiency of financial intermediation, without necessarily eroding the stability of the banking system. Bank competition in the region is traditionally weak largely due to strict entry requirements, restrictions to bank activities, relatively weak credit information systems, and lack of competition from foreign banks and nonbank financial institutions. While increased market concentration does not necessarily imply greater market power, there is a risk that the current and prospective wave of industry consolidation may have long-lasting negative effects on competition if left unchecked.

Mythbusters: Using data to disprove PPP fallacies

Schuyler House's picture
Photo Credit: NATS Press Office

Editor’s Note: The World Bank Group is committed to helping governments make informed decisions about improving access to and quality of infrastructure services, including using Public-Private Partnerships (PPPs) as a delivery option when appropriate. One of the PPP Blog’s main goals is to enhance the understanding of PPPs while eliminating misconceptions about them, ultimately enabling better decision making throughout every stage of the PPP cycle. To that end, the new “Mythbusters” series, authored by PPP professionals, addresses and clarifies widely-held misunderstandings.

In the PPP universe, both advocates and detractors use anecdotes to prove their points about PPPs and infrastructure. PPP successes and debacles are recycled endlessly to argue for one side or the other. But we can move past the myths, in part with the help of the World Bank’s Private Participation in Infrastructure (PPI) Project Database, which includes information on over 6,000 projects from 1984 onwards, capturing data across 30 fields, including contractual form, project closure date, location, contract duration, private sector partners, and multilateral support. By drawing on that resource, alongside other large data sets and comparative case studies, we can confirm or debunk PPP myths rooted in popular commentary. Here are a few examples that show how research can set rumors right.

START-Ups and SCALE-Ups in Western Europe and the World

Simon Bell's picture

At a recent European Commission SME Envoy meeting in Ljubljana, Slovenia, the European group responsible for advising on policy and strategic directions for SME support in the EU discussed options for the way forward. 

Battered by continued anemic growth since the 2008 global financial crisis, hit with a flood of Middle Eastern refugees, and (in early June) facing the possibility of Brexit, the mood was anything but upbeat and the future of “Project Europe” seemed to hang in the balance.

SMEs in most Western European countries represent over 95% of all registered firms, account for 60% of jobs in many countries, and supply as much as 50% to national income. All of this makes SMEs’ contribution to the economy crucial.  Yet, since the financial crisis, banks in many countries haven’t managed to bring their SME lending portfolios back up to pre-crisis levels. Many are deleveraging out of riskier lending such as SME loans. Venture capital in Europe remains well below its levels of 8 years ago. And SME capital markets and SME securitization of loans continue to be severely battered by the continent’s ongoing economic malaise.

The changing face of entrepreneurship

Ganesh Rasagam's picture

Members of the World Bank Group’s Innovation & Entrepreneurship team – along with two of the entrepreneurs supported by the team (with their affiliations in parentheses) – at the Global Entrepreneurship Summit. From left to right: Temitayo Oluremi Akinyemi, Loren Garcia Nadres, Natasha Kapil, Kenia Mattis (ListenMi Caribbean), Ganesh Rasagam, Charity Wanjiku (Strauss Energy), Komal Mohindra, Ellen Olafsen.

What do you picture when you hear of new technologies and hot startups? Perhaps a trendy office space overlooking the Golden Gate Bridge and tech moguls from San Francisco? Well, think again.

At the recent Global Entrepreneurship Summit (GES) in Silicon Valley — an annual event hosted by President Barack Obama and attended by nearly 700 entrepreneurs — one message came across clearly: Great ideas come from anywhere. And, increasingly, they’re coming from talented entrepreneurs who are overcoming the odds in cities like Nairobi, Kenya or Kingston, Jamaica.

Increasing internet and mobile-phone access is bringing new opportunities to young entrepreneurs from developing countries. More than 40 percent of the world’s population now has access to the internet and, among the poorest 20 percent of households, nearly 7 out of 10 have a mobile phone.

Businesses that can take advantage of the widespread use of digital technologies are growing at double-digit rates — in Silicon Valley, as well as in emerging markets. Ground-breaking technologies and business ideas are flourishing across the world, and a new, more global generation of tech entrepreneurs is on the rise.
The potential impact — economic and social — is significant. Entrepreneurs have a powerful ability to create jobs, drive innovation and solve challenges, particularly in developing economies, where technology can address old inefficiencies in key sectors like energy, transport and education.
“[I]n our era, everybody here understands that new ideas can evolve anywhere, at any time. And they can have an impact anywhere,” said John Kerry, the U.S. Secretary of State. “In my travels as Secretary, I have been absolutely amazed by the groundbreaking designs I’ve seen, by the ideas being brought to life everywhere — sometimes where you least expect it.  By the men and women striking out to create new firms with an idea of both turning a profit as well as improving their communities.”
But for many of the brightest minds in developing countries, entrepreneurship is not an easy path.

As President Obama said during the Summit: “It turns out that starting your own business is not easy. You have to have access to capital. You have to meet the right people. You have to have mentors who can guide you as you get your idea off the ground. And that can be especially difficult for women and young people and minorities, and others who haven’t always had access to the same networks and opportunities.”

President Barack Obama on stage at the Global Entrepreneurship Summit with Mark Zuckerberg and entrepreneurs.

The promise of digital banking for Nepal’s remote areas

Farhad Ahmed's picture
Rural maintenance workers engaged in culvert maintenance at Parsa District. Credit: World Bank

On a fine Tuesday morning Roghan Devi, a routine road maintenance worker from Dhanusha district visits the local branch of Mega Bank - a commercial bank in Nepal, to receive her monthly salary. She was notified about this through a text message in her mobile phone. Just a few years back, it was unimaginable for her, and for most of the women from her community, to have a personal bank account.
This initiative is part of a World Bank-supported Strengthening National Rural Transport Program (SNRTP) project that works in 33 districts employing over 1,800 routine maintenance workers- over 70% of them are women - to enhance the availability and reliability of transport connectivity for rural communities. To support this initiative, SNRTP forged a joint collaboration with the private sector. 

Taxing ‘public bads’ and investing in ‘public goods’: Constructive tax policies can help prevent harm and help promote progress

Christopher Colford's picture
To tax, or not to tax? That is the question that preoccupied a thought-provoking panel at a recent World Bank Group conference on “Winning the Tax Wars” – along with such pragmatic policy questions as: What products and behaviors should be taxed, aiming to discourage their use? How heavily should taxes be imposed to penalize socially destructive behaviors? If far-sighted, behavior-nudging taxes are indeed adopted, where should the resulting public revenue be spent?

Before memories start to fade about a stellar springtime conference – at which several of the Bank Group’s Global Practices (including those focusing on Governance and on Health, Nutrition and Population) assembled some of the world's foremost authorities on tax policy – it’s well worthwhile to recall the rigorous reasoning that emerged from one of the year’s most synapse-snapping scholarly symposia at the Bank.

Subtitled “Protecting Developing Countries from Global Tax Base Erosion,” the conference focused mainly on the international tax-avoidance scourge of Base Erosion and Profit-Shifting (BEPS). Coming just one week after a major conference in London of global leaders – an anti-corruption effort convened by Prime Minister David Cameron of the United Kingdom – the two-day forum in the Preston Auditorium built on the fair-taxation momentum generated by the recent Panama Papers disclosures. Those leaks about international tax-evasion strategies dominated the global policy debate this spring, when they exposed the rampant financial conniving and misconduct by high-net-worth individuals and multinational corporations seeking to avoid or evade paying their fair share of taxes.
The Bank Group conference, however, explored tax-policy issues that ranged far beyond the headline-grabbing disclosures about the scheming of rogue law firms and accounting firms, like the now-infamous Panama-based Mossack Fonseca and other outposts of the tax-dodging financial-industrial complex. Conference-goers also heard intriguing analyses about how society can levy taxes on “public ‘bads’ ” to promote investment in “public ‘goods’ ” – as part of the broader quest for broad-scale tax fairness.
"Winning The Tax Wars" via revenue-raising strategies

Informed trading in business groups, ownership concentration, and market liquidity

Alvaro Enrique Pedraza Morales's picture

Institutional investors have become the majority owners of most large corporations and are expected to play a key role for financial development by providing funding for firms, enhancing market liquidity through more active trading, and by promoting better corporate governance in the companies in which they invest.

For developing countries, while most of the literature has focused on the impact of foreign institutional investors on capital markets, little is known about the relation between domestic institutional investors and trading activity, transactions costs, and governance practices. Understanding the role of domestic investors is particularly important since in many of these countries, business groups, which are typically collections of publicly traded companies with significant amount of common ownership, dominate private sector activity. In such context, money management institutions which belong to these business groups are prone to conflicts of interest between their fiduciary responsibilities and the objectives of their own management. For example, business groups’ relations can be used by controlling managers as a mechanism to enhance the entrenchment of corporate control. Alternatively, an institutional investor which belongs to a business group might have access to private information in affiliated firms. Ownership concentration and business group ties potentially exacerbates information asymmetries, discouraging investment.

After a sudden summer cloudburst of controversy, welcome clarity on ‘neoliberalism’ and its excesses

Christopher Colford's picture

Hot off the presses, this month’s edition of the journal “Finance and Development” has been generating both heat and light – and is helping propel a welcome reconsideration of some central elements of the long-dominant but now-disputed Washington Consensus.

The always-thought-provoking journal from the International Monetary Fund, the World Bank’s Bretton Woods sibling, sparked some unusually intense debate recently by publishing a well-documented analysis that poses a succinct and straightforward question — “Neoliberalism: Oversold?

That line of inquiry is surely familiar to all those who have been following the debate — supported by meticulous data from such scholars as Thomas Piketty (“Capital in the 21st Century”), Chrystia Freeland (“Plutocrats”) and Branko Milanovic (“Global Inequality: A New Approach for the Age of Globalization”) — over the intensifying economic inequality that is now corroding many societies, in both the developed and developing worlds. Yet the very invocation of the inflammatory term “neoliberalism” seems to have triggered an intense, if brief, summer storm.

Granted, the word “neoliberalism” is somewhat ill-defined, and, as the article’s authors point out, it is “a label used more by critics than by the architects of the policies.” And, true, it’s unusual to see such a freighted question being asked by the IMF, which has often been seen as a main driver of the Washington Consensus. Yet, no doubt about it, putting “neoliberalism” in the headline makes for a mighty arresting article.