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New Global Findex data shows big opportunities for digital payments

Asli Demirgüç-Kunt's picture

We're delighted to release the 2017 Global Findex, the third round of the world's most detailed dataset of how adults save, borrow, make payments, and manage risk.

Drawing on surveys with more than 150,000 adults in more than 140 economies worldwide, the latest Global Findex features new data on fintech transactions made through mobile phones and the internet. It also provides time series updates for benchmark financial inclusion indicators.

The data shows that financial inclusion is on the rise globally, with 1.2 billion adults opening accounts since 2011, including 515 million in the last three years alone. That means 69 percent of adults globally have an account, up from 62 percent in 2014 and 51 percent in 2011. We see that Fintech, or financial technology, plays a progressively greater role in countries like China, where 50% of account owners use a mobile phone to make a transaction from their account. Compared to 2014, twice as many adults in Brazil and Kenya are paying utility bills digitally.

Brick and mortar operations of international banks

Claudia Ruiz's picture

The existing evidence from both cross-country and country case studies on the determinants of foreign bank entry and on the impact of foreign banks on host economies suggests the brick-and-mortar operations of international banks have important implications for competition and efficiency of the local financial sectors and for financial stability and access to credit in the host country (World Bank, 2018). The Global Financial Development Report 2017/2018: Bankers without Borders contributes to the policy dialogue on international banks by summarizing what has been learned so far about: i) the risks and opportunities posed by foreign banks when entering developing countries and ii) under what circumstances host economies can reap most benefits from the entry of international banks.

Cross-border spillover effects of the G20 financial regulatory reforms: results from a pilot survey

Erik Feyen's picture

After the global financial crisis, the G20 set out on an ambitious financial regulatory reform agenda to strengthen the global financial system. With any type of regulatory framework, incentives are created. While these reforms will ultimately contribute to greater financial stability there is a risk that regulations will have unintended consequences and spillover effects by reducing the incentives to lend to countries with emerging markets and developing economies (EMDEs) where financing is critical to achieving the SGDs.

The Financial Stability Board (FSB) has been actively working to improve the evidence on any adverse effects of the post global crisis financial regulatory reforms. The World Bank works closely with the FSB to ensure the voice of developing countries are represented in these discussions. To complement the FSB’s efforts, our team conducted qualitative surveys in seven EMDEs that focused on the adverse impact of spillover effects that may take place in individual countries that are not required to implement the reforms themselves.

What does the global economic outlook tell the debt managers?

M. Coskun Cangoz's picture
Global Economic Growth

2018 started with the good news. The World Bank’s Global Economic Prospects and the IMF’s World Economic Outlook both show that the global economy is in a recovery. Furthermore, it is expected that the upturn is broad-based as the growth is increasing in more than half of the world economies. Global Economic Prospects report that in advanced economies, growth in 2017 is estimated to have rebounded to 2.3 percent while emerging and developing economies (EMDEs) were projected to have higher-than-expected growth of 4.3 percent. Overall, global growth is projected to edge up to 3.1 percent in 2018.

Over the last decade debt managers, like the central bankers, fiscal policy managers and regulators, had to deal with the global financial crisis. During this period, while debt levels were increasing in many countries, thanks to the unconventional monetary policies, interest rates went down, maturities lengthen up to 100 years, and portfolio capital flows moved across markets. In the end, those were very unusual times. Now the question is: Is this the end of the global crisis? Are we back to the “normal” times?

Indeed, it doesn’t look so.

Which countries face corporate balance sheet vulnerabilities? a novel monitoring framework

Erik Feyen's picture

The debt of the nonfinancial corporate sector in emerging and developing economies (EMDEs) has risen significantly since the global financial crisis, raising concerns about financial stability and spillover risks. While monetary easing in developed economies has allowed EMDE corporates to raise substantial financing from global capital markets, the sharp decline in commodity prices since 2014 and lower growth prospects across EMDEs have weighted on their firms’ profitability and debt service capacity.

The current global environment raises questions. How vulnerable is the current financial situation of the EMDE corporate sector?  How has it evolved since the global financial crisis?

If you build it (roads), will they (financing) come?

Sumit Agarwal's picture

Investments in public infrastructure is a key component of economic growth strategy among emerging economies, and a particular focus of the Modi government. In general, policymakers and financial economist assume that financing will follow once the roads are built, and thus, facilitate the best use of new productive opportunities created by new road connectivity. However, many rural and agrarian economies suffer from chronic problems of financing, characterized by the absence of formal financial institutions and reliance on informal moneylenders who often are unreliable and charge usurious interest rates. Therefore, a key question remains: if you build it (roads), will they (financing) come?

Whither international banking?

Mahmoud Mohieldin's picture

Strong regional and global integration have been central to countries’ rapid growth and reduced poverty. Few economic sectors can better illustrate integration’s potential benefits — and its significant risks — than the banking sector.

The period prior to the 2008 global financial crisis was characterized by a significant increase in financial globalization, which coincided with dramatic increases in bank sizes. This was manifested both in a rise in cross-border lending and in the growing participation of foreign banks around the world, especially in developing countries. These trends resulted in: additional capital and liquidity; efficiency improvements through technological advancements and competition; and, eventually, greater financial development.

However, when the crisis hit, it also vividly demonstrated how international banks can transmit shocks across the globe. It became clear that systems in place to manage the risks associated with financial globalization were seriously flawed. The results were devastating to economies and to people, halting progress in the fight against poverty, affecting their incomes, health, and prospects for years to come.

A glimpse into state financial institution ownership in Europe and Central Asia

Aurora Ferrari's picture

State-owned financial institutions (SOFIs) are back in vogue. Although the theoretical and empirical debate on state ownership in finance may continue to sway back and forth, the 2007–08 global financial crisis renewed policy makers’ interest in SOFIs as a policy instrument.

This interest is particularly visible in countries in Europe and Central Asia (ECA), where policy makers have turned to SOFIs for countercyclical interventions, as quantitative easing appears to have little impact on economic growth; the cost of bailing out privately-owned financial institutions has mounted; and many countries face significant fiscal constraints. From the publicly-owned British Business Bank (established to assist smaller businesses), to the Investment Plan for Europe (the “Juncker Plan,” which relies on “National Promotional Banks” to intermediate resources from the European Fund for Strategic Investments), SOFIs have been used to fill perceived gaps or complement the public policy toolkit.

Beyond cross-border banking: Debt issuance activity after the global financial crisis

Juan Jose Cortina Lorente's picture

Global banks had rapidly expanded their lending activities abroad before the global financial crisis, during the 1990s and early 2000s. Between 1991 and 2007, the volume of syndicated loan issuances a year by nonfinancial corporations increased more than seven times in high-income countries and more than eight times in developing ones (figure 1). However, the global financial crisis (GFC) hit global banks in the developed world especially hard, which reacted by reducing their cross-border lending activities worldwide.

Figure 1. Issuance Activity in Syndicated Loan Markets, 1991–2014
Figure 1. Issuance Activity in Syndicated Loan Markets, 1991–2014

Source: SDC Platinum.

Financial inclusion measurement goes mobile

Leora Klapper's picture

This blog post was originally published on the Microfinance Gateway.

These are exciting times for those of us in the business of measuring financial inclusion. Technology is remaking the financial system every couple of years — and we're adapting the Global Findex survey questions accordingly. Our new data, which we're launching in April 2018, features bundles of new questions on financial services accessed through mobile phones and the internet.

We started collecting data for the first round of the World Bank's Global Findex database — measuring how adults in more than 140 countries worldwide save, borrow, and make payments — in 2010. Back then, our survey asked people about their use of paper checks.

Mobile money was so nascent that we had a few questions about mobile payments, but nothing about mobile money accounts. That came later, with the vastly expanded mobile money module in the 2014 Global Findex.

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