Access to Financial Services in Developing Countries. Michael King 12 May 2015

Transcription

1 Access to Financial Services in Developing Countries Michael King 12 May 2015

2 Household Account Penetra1on MAP 1.1 Account penetration around the world Adults with an account (%), No data available Source: Global Findex database. IBRD APRIL 2015 Source: Demirguc- Kunt et al picture. (2014) almost a third of account Sub-Saharan Africa is an exception to this global There,

3 Household Borrowing MAP 3.2 Origination of new formal loans around the world Adults borrowing from a financial institution in the past year (%), No data available Source: Global Findex database. IBRD APRIL 2015 Demirguc- Kunt et family al (2014) were their only source 36 percent ofsource: adults in the region reported that or friends

4 Firms: Account/Loan Penetra1on Source: Beck and Cull (2014)

5 counterparts. This might reflect differences in policies. (The effect of bank market and ownership structure on the depth, outreach, and stability of African banking systems is discussed in more depth in the following three chapters.) Banking Performance in Africa Interest rate spreads and margins One striking characteristic of banking in Africa is the high interest rate spreads and margins (figure 2.18). True, Africa is not the only region with costly financial intermediation: several Latin American countries also exhibit high spreads. Yet, persistently high margins have been among the top concerns raised by policy makers throughout the region, closer analysis is certainly warranted. As we argue in the Uganda 15% in and 2008 (Cull and Trandafir, 2010) following, these high spreads and margins are mostly caused by the small scale of African Kenya financial 13% in (Were and Wambua, 2014) most systems and the great risks banks still face in most countries. High interest rate spreads can be seen simply as the complement of shallow financial systems with little depth and breadth, given that countries with more de- 1. High interest rate spreads in Africa (weak cross- country data) 2. Lower interest margins but s1ll compara1vely high Decomposi1on suggests that higher interest margins are due to Figure 2.18 Interest Rate Margins across Regions, 2009 weaknesses in contractual environment. Africa East Asia and Pacific Europe and Central Asia high-income countries Latin America and the Caribbean Middle East South Asia 0 Source: Beck et al (2010) net interest margin

6 Banking Performance in Africa 3. High profitability across some regions (25% ROE in Kenya 2010) 4. Growth in lending not necessarily going to produc1ve sectors. Sectoral share of lending for Kenya is presented. Source: Heyer and King (forthcoming)

7 Constraints Framework ˇ ObjecCve: Appropriate, affordable and accesible products Demand Side Constraints 1. Formality 2. Financial literacy 3. Poverty 4. Preferences Supply Side Issues 1. Weak scale economies 2. Lack of compe11on ˇ 3. Contract enforcement issues 4. Slow to reach masses Reality: Lack of a value proposicon for most customers ˇ

8 Innova1ve Business Models Ø Iso-profit curves = the combinations of size/volume that yield the same profit for two alternative banking business models. Ø Right-ward movement broadens access but there are serious limitations to broadening access for traditional banking models. Beck and del la Torre (2006)

9 Three Focus Areas 1. Step change in the informa1on and contract enforcement infrastructure Effec1ve credit bureaus, na1onal databases and even sharing of mobile network data Low cost and effec1ve contract enforcement 2. Suite of mobile accessible savings and lending products Disappoin1ng/unsuccessful usage so far Need to develop 2nd genera1on products

10 Informal Services 3. New wave of savings groups in SSA and CLA. New e- recording app for savings groups to improve efficiency and scale: od 1: by Cloud back up/text message balance reminders Ledgers Ongoing RCT in Western Kenya Tara Mitchell) 5. Introduction to(with E-recording Downloadable from Google play and runs on Android phones. Set up: List members Register rules of group Start first meeting...