> Posted by Leora Klapper, Lead Economist in the Finance and Private Sector Research Team of the Development Research Group at the World Bank
Today the World Bank, in partnership with the Bill and Melinda Gates Foundation, unveils an important new source of information that can help advance the financial inclusion agenda. We call it the “Global Findex,” short for the Global Financial Inclusion Database, and it is the first large-scale, comparable, demand-side financial inclusion data-collection exercise of its kind. Using the Gallup World Poll survey, we measure how over 150,000 adults in 148 economies save, borrow, make payments, and manage risk. We also have the ability to disaggregate by gender, age, education, and income, allowing researchers to more precisely identify the unbanked. Eager to get your hands on the data? Click here.
For those that are still with me, let me share some of our initial findings:
- We see regional, economic, and demographic differences in account penetration. We find that 50 percent of adults worldwide have a formal bank account, with large disparities in account penetration across regions, income groups, and individual characteristics.
In high income economies account penetration is 89%, and in developing economies account penetration is only 41%. Among those living below $2 per day, only 23% have a formal account. In developing economies, if you are wealthy (within the highest quintile in your country), you are more than twice as likely to have an account than if you are poor (within the lowest quintile in your country), on average. Furthermore, 46% of men in developing economies have a formal bank account, compared to 37% of women.
- We have data not only on account ownership but also usage. Globally, 23% of adults report having saved at a formal financial institution in 2011. 61% of account holders worldwide use their account to receive payments from an employer, the government, or family members living elsewhere.
- We can identify why adults don’t have an account. While 65% of non-account holders report that they do not have enough money to use a formal account, there are also other reasons (multiple answers are permitted): for example, an account is too expensive (25%), or is too far away (20%). This is valuable information for policymakers—for instance, mobile technology might offer the opportunity to provide cheaper and more convenient accounts to rural residents. See the chart below for a full breakdown.
- Formal borrowing and formal insurance are rare. Globally, only 9% of adults originated a loan from a formal financial institution in the past year. However, 50% of adults in high-income economies report having a credit card which likely reduces the need for short-term loans. In developing economies, only 7% of adults have a credit card. In addition, only 17% of adults personally purchased health insurance in developing countries. Only 6% of adults in developing economies in the farming or fishing industries reported having personally purchased crop, rainfall, or life insurance.
The Global Findex can be used to benchmark how adults around the world manage their day-to-day finances and help policymakers develop evidence based financial inclusion strategies. Over time, we will be able to track trends, study the impact of policy reforms, and better understand the links between financial inclusion and development outcomes.
Leora Klapper is a Lead Economist in the Finance and Private Sector Research Team of the Development Research Group at the World Bank. She holds a Ph.D. in Financial Economics from New York University Stern School of Business.
The citation for the Global Findex is: Demirguc-Kunt, Asli and Leora Klapper, 2012, “Measuring Financial Inclusion: The Global Findex Database.” World Bank Policy Research Working Paper 6025.
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Image credit: Global Findex
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