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financial inclusion

Jarring Numbers on Financial Inclusion Point to Opportunities for Digitizing Payments

Leora Klapper's picture

In updating the Findex database on financial inclusion over the 2014 calendar year, I had the pleasure of traveling with Gallup, Inc., to pilot our expanded questionnaire. We visited people’s homes and asked them to describe to us how they save, borrow, make payments, and manage their risk.
 
A man who lives in a small home in a Kolkata slum with his wife, children, and parents works as a driver, and is paid directly to a bank account that was opened for him by his employer. With great pride, he told us that every month he leaves a balance in his account, which he believes is a safe place to save for his children’s education.

The Promise of Financial Inclusion

Mahmoud Mohieldin's picture

The following post first appeared on the Huffington Post.

Half the world's adults, approximately 2.5 billion individuals, do not have an account with a formal financial institution. Lack of access to finance is disproportionately skewed towards the poor, women, youth, and rural residents. Defined as the proportion of individuals and firms that use financial services, financial inclusion is increasingly seen as critical for ending extreme poverty and supporting inclusive and sustainable development. It provides people with the tools to invest in themselves by saving for retirement, investing in education, capitalizing on business opportunities, and confronting shocks (Global Financial Development Report, 2014). According to the World Bank Group's newly launched Global Financial Development Report 2014 on Financial Inclusion, most of the unbanked cite barriers such as cost, lack of documentation, distance, lack of trust, or religious reasons.

Financial Inclusion and the Role of the Post Office

Leora Klapper's picture

Financial inclusion is a topic of increasing interest on the international policy agenda. Last week the Universal Postal Union (UPU) hosted the 2013 Global Forum on Financial Inclusion for Development. With over a billion people using the postal sector for savings and deposit accounts and a widespread presence in rural and poor areas, post offices (or “posts”) can play a leading role in advancing financial inclusion. In Brazil more than 10 million bank accounts were opened between 2002 and 2011 after the post established Banco Postal in partnership with an existing financial institution. However, leveraging the large physical network of the post is not without challenges. Posts generally have little or no expertise in running a bank and the business model that a government pursues in providing financial services through the postal network may be critical to its success.

Financial Inclusion in Europe and Central Asia

Douglas Randall's picture

The countries of Europe and Central Asia have made undeniable, if uneven, progress in expanding financial inclusion in recent years. The well-developed microfinance industry and relatively widespread use of wage accounts in some countries are signs of success, though low savings rates and high levels of mistrust in the formal financial sector signal that much work remains to be done. The exclusion from the formal financial system of more than 175 million adults—disproportionately located in Central Asia—presents particularly difficult challenge for policy makers in the region. Our recently published Findex note takes an in-depth look at financial inclusion in the ECA region.

After 25,000 interviews in 23 ECA economies, a subset of the larger Global Financial Inclusion (Global Findex) database , we now know that 45 percent of adults in that region have an account at a formal financial institution. This is on par with the rest of the developing world. But of course we know that there is more to financial inclusion than account ownership, it is equally important to have data on how accounts – and other basic financial tools - are used. Account holders in ECA are much more likely to use their account to receive wages or government payments, as compared to account holders in the rest of the developing world (77 percent vs. 41 percent). This is an interesting insight as to what mechanisms are already working to engage adults with formal financial systems, and something to keep in mind when we think about how to move forward.

IT maven Nandan Nilekani explains Unique I.D. system to reach India's masses

Merrell Tuck-Primdahl's picture

What breakthrough will involve barefoot banking for millions of people, allow welfare and other benefits to be electronically transferred to some of the poorest people in the world and be scaled up in a few years time to reach 1 billion people or more? The answer is 'Aadhaar', the Hindi name that the Unique Identification Authority of India has given to the massive project that will provide unique I.Ds to 600 million by 2014 and eventually to the entire population of the country if all goes as planned.

Counting Financial Inclusion and Debating its Merits

Leora Klapper's picture

Shedding light on and engaging in debate regarding financial inclusion is important and we can now be more informed on the topic thanks to the release last month of the Global Financial Inclusion Database, or Global Findex. With this in mind, I want to react from my point of view as supervisor of the Global Findex project to a recent post by Milford Bateman on The Guardian’s Poverty Matters blog.

Global Findex makes a valuable contribution to our development work, because it means that now researchers and policymakers no longer have to rely on a patchwork of incompatible household surveys and aggregated central bank data for a comprehensive view of the financial inclusion landscape.

It also means debates about financial inclusion can be rooted in more solid facts.

The Global Findex: The first database tracking how adults use financial services around the world

Asli Demirgüç-Kunt's picture

The post orginally appeared on All About Finance.

The facts are in. 50 percent of adults worldwide have an account at a formal financial institution. 21 percent of women save using a formal account. 16 percent of adults in Sub-Saharan Africa use mobile money. These are just a few of the thousands of data points now available in the Global Financial Inclusion (Global Findex) database, the first of its kind to measure people’s use of financial products across economies and over time.