Measuring Financial Inclusion the Global Findex

MEASURING FINANCIAL INCLUSION:

THE GLOBAL FINDEX

Dorothe Singer Development Research Group

Finance and Private Sector Development Team

GLOBAL FINDEX OVERVIEW

Goal to collect comparable cross-country data on financial inclusion by

surveying individuals around the world:

― Measure the use of formal and informal financial services, using consistent

methodology across economies and time

― Identify the segments of the population with greatest barriers to access to finance:

poor, woman, youth, and rural residents.

― Motivate and track policies to expand financial services to the poor

― Design a questionnaire to harmonize financial inclusion questions across economies

Funded by a 10 year grant from the Bill & Melinda Gates Foundation (through

2020)

Added questions on the use of financial services - payments, savings, credit,

and insurance - to the 2011 Gallup World Poll

Currently in the field collecting data for 2014, which includes expanded

payments module; data will also be collected for 2017


What is Financial Inclusion and why is it important?

― Financial inclusion means that households and businesses have access and can

effectively use appropriate financial services. Such services must be provided

responsibly and sustainably in a well regulated environment.

― Financial inclusion can be a key driver of economic growth and poverty alleviation,

as access to finance can boost job creation, reduce vulnerability to shocks and increase

investments in human capital.

― Without inclusive financial systems, poor people must rely on their own limited savings

to invest in their education or become entrepreneurs – and small enterprises must rely

on their limited earnings to pursue promising growth opportunities.

― Growing evidence that financial inclusion has significant beneficial effects for

individuals. Providing individuals access to savings instruments increases savings

(Aportela, 1999; Ashraf et al., 2010a) female empowerment (Ashraf et al., 2010b)

productive investment (Dupas and Robinson, 2009) consumption (Dupas and

Robinson, 2009 and Ashraf et al., 2010b).


Who cares about Financial Inclusion?

Policymakers around the world are increasingly committed to promoting financial

inclusion.

– At the G20 Summit in Seoul, the Leaders of the G20, recognizing financial inclusion as one of the main

pillars of the global development agenda, endorsed the establishment of the Global Partnership for

Financial Inclusion (GPFI); At their summit in St. Petersburg in Sept., 2013, the G20 leaders endorsed the

“G20 Financial Inclusion Indicators” developed by the GPFI to track progress towards financial inclusion and

to assess the state of financial inclusion by measuring access to, use, and quality of financial services

– The Alliance for Financial Inclusion (AFI), a network of financial policymakers that aim to increase access

to appropriate financial services among the poor, drafted the “Maya Declaration”—a measurable set of

commitments by developing country governments to expand financial inclusion—which has been signed by

more than 80 countries

– The United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development

(UNSGSA), Her Majesty Queen Máxima of the Netherlands, is working to ensure that access to financial

services for households and SMEs is recognized as a key enabler of economic growth, poverty alleviation

and development in the post 2015-development agenda

– According to a recent survey of bank regulators across 143 jurisdictions, 67 percent of regulators are

charged with promoting financial inclusion

– WB President Kim announced a new initiative to provide universal financial access to all working-age

adults by 2020


Who are financially included?

― Financial Inclusion refers to the use of financial services

― Importantly, we do not include women that report “indirect” access to financial

services through someone else’s account

Who are the excluded? (not mutually exclusive)

― The Self-Excluded: Adults who truly don’t need or choose not to use financial

services, for reasons other than market failures

― The Involuntarily Excluded: Anyone who does not use services due to barriers

(such as distance, high-cost, etc.) that arise as a result of market failures (like

asymmetric information, inadequate contract environment, etc.)

The role of policy is to broaden financial inclusion to reach those that are

excluded due to market failures

GLOBAL FINDEX ACCOUNTS AND PAYMENTS

2011 Findex Data Collection

― 150,000+ interviews with adults in 148 economies

over the 2011 calendar year

― Represents 97% of the world’s adult population

― Target population: all non-institutionalized adults

ages 15+ (some exceptions)

― Survey translated into 141 languages

― Face-to-face interviews in countries where

telephone coverage represents less than 80% of

population (126 out of 148 economies)

― Telephone interviews in 22 countries, using

Random Digit Dialing

― Average response rate: 65%

Published April 2012


Over 2.5 billion adults do not have an account

41% of adults in developing economies are banked—compared to 89% of adults in high-

income economies

37% of women in developing economies are banked—compared to 46% of men

23% of adults living below US$ 2 per day have a formal account


57% of adults in upper middle income economies have an account — compared to 28% of

adults in lower middle income economies and 24% adults in low income economies


In Central and South East Europe (CSEE) (developing only) 52% of adults are banked

In the Commonwealth of Independent States (CIS) 41% of adults are banked

Account penetration

Adults with an account at a formal financial institution (%)

* Denotes high income country in 2011

0%

10%

20%

30%

40%

50%

60%

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EU CSEE non-EU CSEE CIS


Women, youth, the poor, and rural residents are the least likely to have a formal account

Adults in the poorest income quintile in developing economies are half as likely to be banked as

adults in the richest quintile

A 6-9 percentage points gender gap persists across income groups in developing economies


• GDP per capita can explain a

lot: around 73% of the

variation at the country-level

for the whole sample…

• … but for the bottom 50

percent (below US$ 2,436):

only 15 percent of the variation

(yellow band)

• Uzbekistan and Ukraine have

a similar GDP per capita

(approx. US$ 900 and US$

1000) but an account

penetration rate of 23% and

41%, respectively


66% of unbanked choose “[I] don’t have enough money” — 30% choose it as the only reason

31% of unbanked in Europe and Central Asia choose “[I] don’t trust banks”

31% of unbanked in Sub-Saharan Africa choose “Too far away”

40% of unbanked in Latin America and the Caribbean choose “They are too expensive”

0% 10% 20% 30% 40%

Religious reasons

Lack of trust

Lack of necessary documents

Too far away

Family member already has account

Too expensive

Not enough money (only)

All

CSEE (high income)

CSEE (developing)

CIS

Self-reported barriers to use of formal accounts

Non-account holders reporting barrier as a reason for not having and account (%)

Note: Respondents could choose more than one reason. The data for “not enough money” refer to the percentage of adults

who reported only this reason


61% of account holders in ECA use their account to receive wages—compared to 34% of all

account holders in developing economies and 56% of account holders in high-income economies

24% of account holders in ECA use their account to receive payments from the government—

compared to 15% of all account holders in developing economies and 47% of account holders in

high-income economies

Use of accounts to receive payments in developing countries

Adults using a formal account in the past year to receive payments (%)

0%

10%

20%

30%

40%

50%

60%

70%

Receive wages Receive gov'tpayments

Receive remittances Send remittances

All economies

CSEE (high income)

CSEE (developing)

CIS

GLOBAL FINDEX SAVINGS

20% of adults in ECA saved in the past year, compared to 32% of adults in the rest of the

developing world and 58% in high income economies

7% of adults in ECA saved formally in the past year, compared to 18% of adults in the

rest of the developing world and 45% in high income economies


In Central and South East Europe (CSEE) (developing only) 17% of adults saved in past year

In the Commonwealth of Independent States (CIS) 23% of adults saved in the past year

Formal and informal saving

Adults saving any money in the past year (%)

* Denotes high income country in 2011

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Hig

h In

com

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Eur

ope

& C

entr

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sia

Slo

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Cze

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epub

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Slo

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Rep

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*

Est

onia

*

Lith

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Pol

and*

Hun

gary

*

Latv

ia

Rom

ania

Bul

garia

Alb

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Cro

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*

Mac

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ia, F

YR

Kos

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Ser

bia

Bos

nia

and

Her

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Mon

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Tur

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Tur

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Kyr

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Rep

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Bel

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Fed

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Kaz

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Mol

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Arm

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Geo

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EU CSEE non-EU CSEE CIS

Using other

methods only

At a financial

institution


40% of account holders in developing economies saved formally in the past year

14% of account holders in ECA saved formally in the past year


29% of account holders in high income CSEE economies saved formally in the past year

14% of account holders in developing CSEE economies saved formally in the past year

17% of account holders in CIS economies saved formally in the past year

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

High income Developing CSEE(high income)

CSEE(developing)

CIS

Savings behavior among account holders

Adults with a formal account by savings behavior in the past year (%)

Did not save

Saved using other

methods only

Saved formally

GLOBAL FINDEX CREDIT

7% of adults in developing economies have a credit card—compared to 50% of adults in high-

income economies

8% of adults in developing economies borrowed money from a formal lender in the past year—

compared to 14% of adults in high-income economies

GLOBAL FINDEX CREDIT

10% of adults in high-income CSEE economies borrowed money from a formal lender in the

past year—compared to 9% of adults in developing CSEE economies and 8% in CIS economies

16% of adults in Europe and Central Asia have a credit card—and 20% of adults in high-income

CSEE economies

0%

5%

10%

15%

20%

25%

30%

High income Developing CSEE(high income)

CSEE (developing) CIS

Retail store (store credit) I

I

I

I

I

I

Bank, credit union, or MFI I

I

I

I

I

I

I

Informal lender I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

Sources of new formal and informal loans

Adults borrowing from source in the past year (%)

Family or friends I

I

GLOBAL FINDEX FINDEX 2014

Findex 2014

― Triennial update of Findex data will add time-series dimension to database

― In 2013, additional funding from the Bill & Melinda Gates Foundation was secured to

expand the 2014 Findex to include an extended module on payments

Motivation

― Approximately 2.5 billion people are cut off from digital financial systems and must

rely on cash to manage their day-to-day finances and plan for the future.

― Policymakers and donors increasingly view the migration of poor households to

digital payment platforms as an essential ingredient in expanding financial inclusion

― Better demand-side payments can:

• Enhance understanding of how payments relate to saving, borrowing, and risk

management behaviors

• Help track and monitor efforts to expand digital payments

• Demonstrate size of potential market to private sector

― Will cover domestic remittances, wage payments, government-to-person

payments, utility payments, mobile money, debit/credit/payment cards

GLOBAL FINDEX DATA RELEASE

Global Findex Suite of Products

― Financial Inclusion Data Portal

― World Bank eAtlas of Financial Inclusion

― Global Financial Inclusion Microdata Databank

― Research Papers and Findex Notes

Reference citation for the Global Findex:

Asli Demirguc-Kunt and Leora Klapper, 2012, “Measuring Financial Inclusion:

The Global Findex Database”, World Bank Policy Research Paper 6025

www.worldbank.org/globalfindex

Twitter: @globalfindex