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Financial Sector

Can mobile money increase investment by businesses?

Asif Islam's picture

Investment is one of the pillars of private sector development. The acquisition of assets enables firms to increase their capacity and improve their efficiency, unlocking avenues of growth. Promoting firms’ growth is especially critical in Sub-Saharan African countries that have predominantly low levels of economic development and high rates of poverty. Against this backdrop, there has been a rapid increase in mobile money use - that is the use of mobile phones for financial transfers. At the end of 2015, mobile money services were available in 93 countries -with a total of over 411 million registered accounts and 134 million active users (GSMA, 2015). Many of these users are firms that increasingly rely on mobile money to pay bills, suppliers, and salaries or to receive payments from customers. While numerous advantages of the permeation of mobile money has been explored,  including lower transaction costs, little research has been done to investigate the far-reaching benefits that lowering transaction costs could entail, such as increasing firm investment. To fill this void, we recently completed a study on the effect of mobile money use on firm investment in three countries – Kenya, Tanzania and Uganda.

What did we learn from real-time tracking of market prices in South Sudan?

Utz Pape's picture

Economic shocks can be painful and destructive, especially in fragile countries that can get trapped into a cycle of conflict and violence. Effective policy responses must be implemented quickly and based on evidence. This requires reliable and timely data, which are usually unavailable in such countries. This was particularly true for South Sudan, a country that has faced multiple shocks since its independence in 2011. Recognizing the need for such data in this fragile country to assess economic shocks, the team developed a real-time dashboard to track daily exchange rates and weekly market prices (click here for instructions how to use it).

Financial inclusion has a big role to play in reaching the SDGs

Leora Klapper's picture

Scan the United Nations’ 17 Sustainable Development Goals (SDGs). You’ll see inclusive growth, clean water and greater equality, among other objectives. But you won’t see this: Giving people access to savings accounts, loans, insurance and other financial services.

The effects of benchmarks on international capital flows: The problems of passive investing

Sergio Schmukler's picture

The categorisation of countries into relevant international benchmark indices affects the allocation of capital across borders. The reallocation of countries from one index to another affects not only capital flows into and out of that country, but also the countries it shares indices with. This column explains the channels through which international equity and bond market indices affect asset allocations, capital flows, and asset prices across countries. An understanding of these channels is important in preventing a widening share of capital flows being impacted by benchmark effects.

Managing sudden stops

Poonam Gupta's picture

The recent reversal of capital flows to emerging markets has pointed to the continuing relevance of the sudden stop problem when capital inflows dry up abruptly.

In a recent paper  as well as a  Vox column, we analyze these episodes in emerging markets over the past quarter century. We contrast their incidence, impact, correlates, and policy response before and after 2002, and establish similarities as well as differences.

Negative interest rates as a fishhook

Kaushik Basu's picture




The State of the Global Economy


[Based on the opening remarks made at the Chief Economists’ Roundtable on “Growth and Inclusion in Turbulent Times”]
 
It is time for the annual Spring Meetings. Many of the world’s finance and development ministers, along with business and civil society leaders, are here is Washington and have been meeting with us at the World Bank this week to discuss what we can do to rise up to these challenging times. Most conversations have come to land on two important questions, namely: What is happening around the world in different regions? And: what can we do to stem the slowdown and disunity around the right policy way ahead?

Could the digital revolution get more women into work?

Leora Klapper's picture

The most recent International Women’s Day focused on accelerating gender parity, which makes it a perfect time to highlight the urgent need to boost women’s economic participation worldwide. One way of doing that is by tapping into the power of digital payments and digital financial services.

Handling volatile capital flows--the Indian experience

Poonam Gupta's picture
Capital flows to emerging economies are considered to be volatile. Influenced as much by global liquidity and risk aversion as by economic conditions in receiving countries, capital flows move in a synchronous fashion across emerging economies. There are periods of rapid capital inflows, fueling credit booms and asset price inflation; followed by reversals when exchange rates depreciate, equity prices decline, financial volatility increases, and GDP growth and investment slows down. These periods of extreme flows have unintended financial and real implications for the recipient countries.

How digital financial services boost women’s economic opportunities

Leora Klapper's picture

Imagine having to skip work every month to travel to the city center just to pay your electricity bill or your child’s school fee? Would you not worry if your income relied on remittances and you were unable to pay rent because they were tied up in a network of agents? And wouldn't it frustrate you if you didn’t have a say in how your salary was spent or invested?

Having a bank account could help in all of these situations. Most of us probably have auto-pay set up so we don't need to worry about our monthly bill payments or money transfers. But the conveniences we take for granted are out of reach for the world's 1.1 billion women who lack an account. According to World Bank’s Global Findex database, men in developing countries are 9 percentage points more likely than women to own an account. The gap is largest in South Asia, where only 37 percent of women have an account compared with 55 percent of men.

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