You are currently browsing the monthly archive for December 2012.
The following post, written by Tilman Ehrbeck, CEO of CGAP, was originally published on the Huffington Post Business Blog, with the title Behavioral Insights to Advance Financial Inclusion — or Why Swedes Are Not Necessarily Better Human Beings Than Danes.
In Sweden, all new drivers start out registered to be organ donors in the event of their passing. They have the freedom to opt out without negative consequences. Fourteen percent decide to do so and 86 percent remain organ donors. Across the Oresund, less than 10 miles away, Danes have to proactively decide whether they want to become organ donors. Less than 5 percent do, and more than 95 percent don’t. On the global scale of things, Sweden and Denmark are culturally quite similar: generally credited with being open-minded, socially responsible, common-sense Scandinavians.
The vast difference between Swedish and Danish organ donor participation rates (technically “presumed consent”) despite all the cultural similarities is one of the most dramatic examples of the power of policy design that takes into account pervasive human cognitive and behavioral biases to help us do what we generally think is a good thing, but often have a hard time following through with. One such bias is that, when decisions are tough, we tend to prefer the status quo; and relatedly, it’s much harder to proactively opt for something, rather than to simply stick with the offered default choice. (The approach, popularized by the term ‘nudging,’ even led the UK Prime Minister to set up a ‘nudge’ policy advisory unit.)
> Posted by Center Staff
December 31st is the first application deadline for the 2013 Harvard Business School-Accion Program on Strategic Leadership for Microfinance.
The Program – the world’s first education course to provide high-level management and leadership training for those shaping the microfinance industry – will be held April 1-6 at the HBS campus in Cambridge, Massachusetts. As in previous years, the course will employ the HBS-pioneered case method approach in which participants work through real-life situations and decisions while exploring the key issues shaping financial inclusion.
Past Program participants encompass an array of financial inclusion leaders, including executives from microfinance institutions to conventional commercial banks and policymakers. Here’s what a few of them have said about their experiences with the Program:
> Posted by Center Staff
During this holiday season we here at the Center have enjoyed finding festive greetings in our inboxes and, to a lesser extent, our mailboxes. Though amongst the lot, there was one message that stood out so much we felt compelled to share it.
Demyst.Data – a startup that aggregates and analyses “big data” to help financial institutions extend credit to underserved customers – emailed the below ode to one of our team members. Accion is an investor in Demyst through its new initiative, Venture Lab. In speaking about Demyst, Venture Lab Managing Director Paul Breloff recently said, “Demyst is a breakthrough technology that can help financial institutions around the world, including microfinance institutions, more efficiently and responsibly reach neglected customer segments with credit and other financial services.”
> Posted by the Smart Campaign
The Smart Campaign is pleased to announce the release of a new tool to be used during the “Compulsory Group Training” portion of many group lending methodologies.
The tool – available for download on the Smart Campaign website – is designed to help microfinance institutions incorporate the Client Protection Principles into their compulsory group trainings (CGT). These trainings are group-level customer education programs MFIs use to interact with and screen prospective clients. CGTs are conducted by institutions practicing village banking methodology, and Grameen-style Joint Liability Group methodology, prior to the client group’s obtaining credit. The trainings are often the first formal interaction between the prospective clients and the MFI.
> Posted by Vanesa Sanchez, Senior Analyst, Economist Intelligence Unit
The Economist Intelligence Unit’s 2012 “Microscope on Microfinance” benchmarking study – the sixth of the EIU’s annual microfinance markets assessments – features new indicators on responsible finance and client protection that cover two of the seven Smart Campaign Client Protection Principles. Transparency in pricing looks at the laws, regulations, and practices in place for interest-rate transparency among MFIs. And Dispute resolution evaluates whether a country has mechanisms for the timely resolution of disagreements, at a reasonable cost, between microfinance lenders and borrowers. These indicators were incorporated to recognize the growing importance of client protection and financial responsibility for the sustainable growth of the microfinance industry.
An empirical analysis of the Microscope by the World Bank’s research department found that after controlling for other potentially influencing factors, both of these indicators were positively correlated with market penetration measures, for example microcredit borrowers as a percentage of the country’s population or of the poor population. These indicators also correlate positively with the average loan portfolio size of MFIs at the country level. In other words, larger and more developed microfinance markets are also more likely to have consumer protections in place.
> Posted by Anita Gardeva, Senior Analyst, CFI
The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”
A who’s who of the global financial education community came together this month at the ninth annual Citi-FT Financial Education Summit in Manila. I was excited to attend this signature event, organized by the Citi Foundation, the Pearson Foundation, and the Financial Times, and I took home a number of important insights. Most importantly, it is clear that we need much more information and evidence about what works in regards to building financial capability.
> Escrito por Laura Galindo, Asociada Senior, the Smart Campaign, CFI
El siguiente blog está disponible también en inglés.
Desde su lanzamiento en 2009, the Smart Campaign ha desarrollado y difundido un número importante de herramientas para ayudar a que las instituciones financieras pongan los Principios de Protección al Cliente en práctica. Hoy en día, el sitio web de la Campaña se ha convertido en el lugar predilecto para la industria de microfinanzas cuando se trata de herramientas y recursos sobre temas de protección al cliente. Con más de 60 herramientas diferentes y más de ciento veinte mil visitas a esta sección de la página web, nos complace poder seguir ayudando a los proveedores de servicios financieros a pasar de la sensibilización de la importancia de los Principios de Protección al Cliente a la implementación práctica de éstos.
> Posted by Laura Galindo, Senior Associate, the Smart Campaign, CFI
The following post is also available in Spanish.
Since its launch in 2009, the Smart Campaign has created and disseminated numerous tools to help financial institutions put the Client Protection Principles into practice. Today, the Campaign’s website is the go-to place for tools and resources on client protection for the microfinance industry. With more than 60 different tools and over one-hundred and twenty thousand website hits, we are excited to continue helping financial service providers move from being aware of the importance of Client Protection Principles to implementing them.
> Posted by Ignacio Mas, Independent Consultant
Google Trends is a public web facility which shows how often particular search terms are entered in Google relative to the total search volume, globally or for individual countries, and for defined time periods (after 2004). This gives us a good perspective into how people are approaching our industry. I looked up some of the most prominent financial inclusion terms, and found some very interesting things.
Industry rebranding. The first graph below shows that the search term “microfinance” has been much more popular than “microcredit” over the last eight years. (In each graph, all data points are scaled relative to the highest value on that graph – see methodological note at the end of this post.) “Microcredit” surged in late 2006 with the granting of the Nobel Peace Prize to Muhammad Yunus. Since then, searches on “microcredit” have been decreasing in relative terms and, by contrast, the new term “financial inclusion” has been gaining ground and is now comparable in its use as a search term to “microcredit.” Still, despite strong attempts from many quarters to rebrand around the financial inclusion label, it has not yet taken off.
> Posted by Leora Klapper, Lead Economist, Development Research Group, World Bank
Yesterday marked another big step forward in the long-term effort to fill in the financial inclusion data landscape. We in the World Bank’s Development Research Group published the complete micro dataset of the Global Financial Inclusion (Global Findex) dataset—the first comparable, cross-country, demand-side data that studies how adults worldwide manage their daily finances and plan for the future.
Ever wondered what percentage of Sub-Saharan women under age 30 with an account use a community-based group to save? The answer is 26 percent but the broader point is that whether you’re looking for a specific statistic or interested in doing your own analyses on the financial behaviors of individuals, you now have a powerful new tool at your disposal. We’re talking over 150,000 individual-level observations, representing adults in 148 economies, and 97 percent of the world’s adult population (the country-level data was released in April). Users can download the complete worldwide dataset, or datasets by country.
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