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> Posted by Center Staff

After great anticipation, three years’ worth to be exact, the 2017 Global Findex Database was officially released this morning. The Global Findex is the authoritative data source on global progress toward financial inclusion. Released every three years, the Global Findex surveys more than 150,000 adults in 144 economies to better understand how people access and use financial services to make payments, and also to save and borrow.

Since the 2014 Findex, the percent of the global population that has a bank account with a financial institution or mobile money service rose from 62 percent to 69 percent. Five-hundred and fifteen million individuals opened an account for the first time over the past three years, reducing the unbanked population to 1.7 billion adults worldwide. However, the new data also reveal critical shortcomings in progress. For instance, the financial inclusion gender gap didn’t improve. Globally, women remain 7 percent less likely to own a bank account than men.

Here are a few of the 2017 Global Findex’s high-level statistics:
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> Posted by Sonja Kelly and Elisabeth Rhyne, Director of Research and Managing Director, CFI

The World Bank is just days from releasing the next version of its Global Financial Inclusion Index (Findex), the authoritative data source on global progress toward financial inclusion. The dataset, which tracks financial inclusion in 150 countries, is released once every three years, and we have been waiting eagerly to see how things have changed since 2014. We are confident that the numbers will show enormous progress on the World Bank’s goal of universal access to financial accounts. But we wonder whether the news will also indicate that people are actually using those accounts and whether financial services are helping them achieve financial health, gain resilience and pursue opportunity – the ultimate goals of financial inclusion.

After we high-five the World Bank team for a job well-done, here are a few things that we will be looking for when we examine the new Findex numbers:

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A high-level business case for financial inclusion constructed using data on the impact of M-PESA on poverty in Kenya

> Posted by Ethan Loufield, Director of Strategy and Operations, CFI

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In making the case for financial inclusion, advocates often try to appeal to our business sense, rather than just speak to how it can improve people’s lives. In so doing, they often refer to the “business case,” which in some ways feels like an attempt to convince the disinterested or the skeptics. It’s an acknowledgement that in order to muster the resources needed to make the financial system work better for lower income market segments, there has to be a payoff for those who provide the services. The fact is that the future of financial inclusion depends greatly on there being a payoff. And when you stop and think about it, it shouldn’t be that hard to show that there is one.

As the title to this post suggests, the value that financial inclusion can help to unlock could very well be measured in the trillions of dollars. So, what we see is an enormous asset (arguably with the potential to surpass the value of all the gold in the world, for example), and it behooves those of us in the financial inclusion community to capitalize on this to expand our influence in the market.

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> Posted by Lizzy Bolze, Project Specialist, Investing in Inclusive Finance, CFI

Board members and CEOs of MFIs in the MENA region met at the MENA Governance and Strategic Leadership Seminar hosted by CFI, Calmeadow and the Sanabel Network, in Jordan this March

Over the past few years, the financial inclusion landscape in the Middle East and North Africa (MENA) region has rapidly evolved with new market entrants, changing regulations and increased financial risks. The industry aims to expand access to formal financial services and achieve much needed economic stability, and yet the financial inclusion ecosystem in MENA has experienced slower growth over the last 10 years compared to their peers in other parts of the developing world. According to reports by the World Bank and CGAP, microfinance institutions (MFIs) in MENA are currently reaching approximately 3 million borrowers, with a loan portfolio of over $2 billion — far below the market potential estimated at 56 million borrowers. The stakes are getting higher and MFIs need to reconsider their strategic directions in order to reach the unmet clients at the base of the economic pyramid.

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> Posted by Pablo Antón Díaz, Research Manager, CFI

Leonardo Tibaquira Morales, Product Manager at Accion, leads a training for workshop participants who work with pensions

Traditional financial education programs have, at best, a minimal impact on the financial capability of recipients. At least that’s what the research tells us. Still, the vast majority of time and energy contributed towards improving financial capability around the world is channeled through traditional methods. I had the opportunity to take a closer look – and contribute to – one country that is energetically trying to improve financial capability: Colombia.

The Colombian government recognizes that the average level of financial literacy and financial capability in the country is low, especially among rural and low income communities (as a joint-study by CAF and others across several South American countries demonstrates) and that the programs implemented thus far have been insufficient to address the issue. But, the country is poised for change.

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> Posted by Kelsey Truman, HBS-Accion Program Coordinator, CFI

Domestic abuse and violence against women (VAW) are pervasive and shocking. According to the World Bank, 38 percent of murders of women globally are committed through intimate partner violence. Globally, one-third of all women have experienced domestic or intimate partner violence. The World Health Organization even went so far as to call VAW a “global health problem of epidemic proportions.” Could financial services possibly play a role in improving this situation?

One of the largest hurdles in combating VAW around the world is women’s inability or unwillingness to seek help when they find themselves in abusive situations. In conjunction with fear, one important reason many women don’t seek help rests on their degree of financial dependency. That is, they don’t have enough money or economic resources necessary to establish themselves independently, much less pay for legal fees and so forth. Furthermore, women’s vulnerability to violence has been shown to increase with their relative level of poverty. If women are given options to easily and discreetly pursue financial options and open bank accounts independently of their husbands and other male family members, it could very well save their lives one day.

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In the following post, John Owens offers an overview of his research project with the CFI Fellows Program.

Background & Research Questions

More and more online credit providers have started to offer loans to not only consumers but also to SMEs around the world.

Outside of digital banking platforms, new alternative online and digital platforms that target consumers and small SMEs include:

  • Peer-to-peer (P2P) SME lenders
  • Online balance sheet lenders
  • Loan aggregator portals
  • Tech and e-commerce giants
  • Mobile data-based lending models

While the rise of alternative data-based lending has opened new and innovative credit opportunities for individuals and SMEs, these new technologies and providers also come with several consumer protection challenges. These can be categorized into seven main areas:
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> Posted by Center Staff

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“Despite its recent years of rapid growth, Islamic finance is still in its early stages of development,” the World Bank wrote last year. Today in 2016, this is still the case, but this banking segment is certainly demonstrating advances that might suggest otherwise.

Today and tomorrow in Nairobi, delegates from 35 countries are convening to attend the Global Islamic Microfinance Forum. The event, hosted by the AlHuda Centre for Islamic Banking and Economics, seeks to explore the latest developments and trends in the sector, catalyze innovation in the industry, and boost awareness on how Islamic finance can support social development and poverty alleviation. Once the forum concludes there will be a two-day workshop on how to develop, operate, and sustain Islamic microfinance institutions.

Islamic finance has grown at roughly 10-12 percent annually over the past decade. Between 2011 and 2014, Sharia-compliant financial assets rose from US$ 1 trillion to 2.1 trillion. In many Muslim countries, Islamic finance assets have been growing faster than conventional banking assets. In non-Muslim-majority counties, Islamic finance has also seen substantial progress breaking ground in new countries and growing in already-established markets, including China, Kenya, Nigeria, Tanzania, South Africa, and the U.K. It’s estimated that there are over 1,500 organizations working in Islamic finance across 90 countries – 40 percent of which are non-Muslim-majority countries.

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> Posted by Elisabeth Rhyne, Managing Director, and Sonja Kelly, Director of Research, CFI

The following post was originally published on NextBillion.

As we approach the World Bank Annual Meetings this year in Washington, D.C., one topic world leaders will discuss is how to reach universal financial access by 2020. But there is a resounding dissonance between enthusiasm for one of the most-touted solutions to financial exclusion and the evidence to date.

We’re talking about the fervor with which shifting government welfare payments to electronic form (government-to-person or G2P payments) is put forward as a quick route toward universal access. The evidence we’ve seen suggests that while moving G2P to electronic form has important benefits, clients are not yet benefitting from meaningful increases in financial inclusion.

The argument in favor of G2P electronic payments for financial inclusion is simple. Many governments offer cash transfers to millions of people at or below the poverty line, most of whom are not connected to the formal financial system. If these cash transfers are funneled into bank accounts rather than paid directly out in cash, these people immediately gain an on-ramp to financial services.

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> Posted by Center Staff

Looking Beyond [Universal Financial] Access

CFI defines Financial Inclusion as “a state in which everyone who can use them has access to a full suite of quality financial services…”

The World Bank’s latest edition of the Global Findex revealed that between 2011 and 2014 over 700 million people were newly financially included, at least according to the top line metric of account ownership. The Universal Financial Access program continues to drive home the message that financial access is within reach, even possibly by 2020. We at CFI are now shifting our focus to the other elements of financial inclusion, those which we have always stood by and advocated for, but those that will certainly take longer than 2020 to reach.

Our definition continues:

“… provided at affordable prices, in a convenient manner, with respect and dignity. Financial services are delivered by a range of providers, in a stable, competitive market to financially capable clients.”

In this issue of our ongoing Financial Inclusion 2020 e-magazine series you will find insights from recent or ongoing CFI research projects. In a rundown of our Business of Financial Inclusion report, you will hear what commercial bank managers told us about the opportunities and challenges that they face in reaching unbanked and underbanked customers. You will also dive into how commercial banks are partnering with financial technology startups to serve new customers and broaden their product offerings. In the e-zine’s research spotlight, we take a critical look at how effective G2P payments have been in advancing financial inclusion. We also explore the role of microfinance in microenterprise growth. In addition, we discuss the importance of two emerging concepts, financial health and financial capability, and what these two frameworks mean for regulators, providers, and customers.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.