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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.

Friday roundup: Fuel subsidies, Stiglitz on US investment pacts, Afro optimism, China Plenum and OECD aid overhaul

LTD Editors's picture

'A 12-Step Program for Fuel Subsidy-aholics' by Eric Morris on Freakonomics lays out ideas for how to limit or eliminate such subsidies, drawing on research by the IMF and others.

In a Project Syndicate piece titled 'South Africa breaks out', Joe Stiglitz explains why several important emerging market countries are not fans of either the transatlantic or Pacific investment pacts now being negotiated.

A New Pew Research Report finds Despite Challenges, Africans Are Optimistic about the Future. Indeed, the survey actually shows that, when it come to the economic Outlook, respondents were more positive in Africa than Europe or Middle East.

The organization of political parties and the politics of bureaucratic reform

LTD Editors's picture

Bureaucratic reform is a priority of donor organizations, including the World Bank, but is notoriously difficult to implement. In many countries, politicians have little interest in the basic financial and personnel management systems that are essential to political oversight of bureaucratic performance. A new paper by Cesi Cruz and Philip Keefer presents a new perspective on the political economy of bureaucracy. Politicians in some countries belong to parties that are organized to allow party members to act collectively to limit leader shirking. This is particularly the case with programmatic parties. Such politicians have stronger incentives to pursue public policies that require a well-functioning public administration. Novel evidence offers robust support for this argument. From a sample of 439 World Bank public sector reform loans in 109 countries, the paper finds that public sector reforms are more likely to succeed in countries with programmatic political parties. Read the entire paper here.

Seeing the Human Face of the Global Financial Crisis

Inci Otker-Robe's picture

The collapse of a US investment bank in the fall of 2008 turned a severe credit crunch into the worst financial crisis since the great depression, providing a blunt reminder that mismanagement of risks does not go unpunished. What is more, mismanaged risks do not respect boundaries in a tightly interconnected world, damaging anything they touch on their path, hurting especially the poor and vulnerable. While financial systems can contribute to economic development by providing people with useful tools for risk management, such as credit, savings, and insurance, they can create severe crises with devastating social and economic effects when they fail to manage the risks they retain.

Friday Roundup: Development Impact Bonds, Good Governance, and Doing Business

LTD Editors's picture

Matthew Bishop of The Economist, describes the concept of Development Impact Bonds (DIBs).  The idea is that a delivery agent (an NGO, for example) figures out how to make a measureable improvement in some social problem, someone (usually government, perhaps philanthropy) agrees to pay for that outcome if it is achieved, and investors provide financing that pays for the intervention. Learn more on the Philanthrocapitalism Blog.

The Connection Between Wall-Street and Main-Street: Measurement and Implications for Monetary Policy

Maya Eden's picture

Monetary policy is widely considered as an effective tool for short-term stabilization. However, in recent decades, evidence suggests that its effectiveness in the US has been somewhat dampened. What is the reason behind this trend? Can it inform us about the relationship between monetary policy transmission and the complexity of the financial system?

In a recent paper, Alessandro Barattieri, Dalibor Stevanovic, and I document a rising trend in the fraction of financial claims which have direct counterparts in the financial sector (rather than the non-financial sector, which includes traditional borrowers such as firms, households and governments). We estimate that, up until the 1970s, close to 100% of financial assets had direct non-financial counterparts; today these traditional claims represent a mere 70% of financial assets, while the rest represent loans between financial institutions. We point out that this trend roughly coincides with the declining impact of monetary policy shocks, and propose a model that links these two trends.

Resilience is a worthy goal...

Kyla Wethli's picture

...but is only one aspect of what we can achieve with effective risk management.

Resilience has become a sexy word in development. Ban Ki Moon has said that resilience should be an important component of the post-2015 agenda; there is a blooming industry of publications with the term resilience incorporated into their titles; daily google searches for the word resilience have roughly doubled in the past few years.

From a risk management perspective, resilience can be understood as the ability of a system to withstand and recover from negative shocks. Given the plethora of risks people face in their daily lives, and the damaging and sometimes permanent effect that negative shocks can have, resilience is clearly a worthy goal of improved risk management.  This is especially the case for the poor: with few assets to help them prepare for these risks, and often without good access to markets and government services, they are often disproportionately exposed to and affected by negative shocks.

The Academic Sting Operation

Adam Wagstaff's picture

Nobody likes to be stung. Doctors regard it as unethical. Publishers say it betrays the trust of their profession. But the fact is, as three recent studies have demonstrated, sting operations can be extremely effective at exposing questionable professional practices, and answering questions that other methods can't credibly answer.

Sting #1: Are open-access journals any good? 

Much of the world has gotten fed up with the old academic publishing business. Companies like the Anglo-Dutch giant Elsevier and the German giant Springer earn high profit margins from their academic journals (Elsevier earns 36% profit, according to The Economist), through a mix of ‘free’ inputs from academics (the article itself and the peer-review process) and high (and rapidly rising) subscription charges that impede access by academics working in universities whose libraries can’t afford the subscriptions. Of course, many of these universities paid for the authors’ time in the first place, and/or that of the peer-reviewers; tax-payers also contributed, by direct subsidizing universities and/or by the research grants that supported the research assistants, labs, etc. Unsurprisingly, libraries, universities, academics and tax-payers aren’t happy.

Friday Roundup: Inequality demystified, CCTs, GiveDirectly, post offices to expand financial inclusion, and malaria in Africa

LTD Editors's picture

Globalization has benefited an emerging “global middle class,” mainly people in places such as China, India, Indonesia, and Brazil, along with the world’s top 1 percent, said Branko Milanovic at a recent Policy Research Talk. But people at the very bottom of the income ladder, as well as the lower-middle class of rich countries, lost out.

In an article published by The Economist today, World Bank researcher Berk Ozler contends that conditional cash transfers work better when the problems individuals face go beyond mere shortage of cash.  If families do not appreciate the real value of education, for instance, or if part of the benefit of doing something comes when everyone does it (vaccination is a case in point), people left to themselves may not spend enough on education or health. CCTs help to overcome that.

Economic Analysis and Knowledge Agenda: Keeping the World Bank Group at the forefront?

Sudharshan Canagarajah's picture

Over the past sixty years, the World Bank has been at the forefront of economic analysis through the projects and programs it has designed and financed in the developing world. The robust economic analysis that was carried out for many early infrastructure and later social sector projects helped client countries to learn the key cost and benefit parameters that underlay these projects. When I was at university, cost benefit analysis (CBA) publications of World Bank were used to illustrate how to carry out economic analysis of projects, including what factors to consider, the limitations of standard methods, the nuances which need to be considered, and the sensitivity analysis that needed to be carried out to ensure that the analysis is technically robust.