Measuring Financial Inclusion: The Global Findex Data Leora Klapper Finance and Private Sector Development Team Development Research Group World Bank
GLOBAL FINDEX Financial Inclusion data In depth data but less coverage Supply side surveys Various institution- specific administrative data Demand side surveys LSMS financial modules FinScope EFiNA Finclusion WB Financial Literacy surveys OECD SME Scorecard Limited headline numbers but broader coverage IMF IFS GSMA WB Global Payment Systems Survey Global Findex WB Enterprise Surveys Gallup World Poll, World Value Survey, etc.
GLOBAL FINDEX Account ownership Financial Inclusion In 2014, the World Bank -- with funding from the Bill & Melinda Gates Foundation and in partnership with Gallup, Inc. updated and expanded the Global Findex dataset, an unprecedented study of financial inclusion based on interviews with almost 150,000 adults in over 140 countries worldwide.
GLOBAL FINDEX Account ownership 10 Financial Inclusion, 2014 62% of adults have an account as of 2014, up from 51% in 2011 4 pp Account at a financial institution 9 8 7 15 pp Mobile Money account 6 18 pp 8 pp 12 pp 5 10 pp 4 10 pp 3 2 1 China East Asia & Pacific (ex. China) India South Asia (ex. India) Europe & Central Asia High Income: OECD Latin America & Caribbean Middle East Sub-Saharan Africa Note: Significant change in account ownership from 2011 to 2014 is shown in red above each bar.
GLOBAL FINDEX Account ownership Financial Inclusion in Developing Countries, 2014 Men 59% The percent of unbanked adults in the poorest 4 of households dropped by 17 percentage points but more than half in developing countries are still without accounts Women 5 In India, men are more than 20 percentage points more likely than women to have an account Richest 6 of Households Poorest 4 of Households 46% 6 In the Middle East older adults are twice as likely as younger adults to have an account 234 million adults in China remain unbanked and 71% of them live in rural areas
How Can Digital Payments Raise Income? Digital payments can facilitate wage, transfer and remittance payments and have the potential to increase income by allowing households to smooth consumption and accumulate savings Lower cost and time to send and receive payments Increased security of payments and lower associated crime More transparency and thus lower leakage between sender and receiver Builds transaction history and improves credit access Increasing the security, privacy and control over the funds received, especially for women Helps people meet unanticipated expenses In Kenya, women who had savings accounts invested 45 percent more in their businesses and were less likely to sell off assets when faced with a health emergency
GLOBAL FINDEX Digital payments Digital payments No digital payments from/to the account 10 9 8 Digital payments from/to the account 7 6 5 4 3 2 1 China East Asia & Pacific, excl. China Europe & Central Asia Latin America & Caribbean Middle East India South Asia, excl. India Sub-Saharan Africa High Income: OECD Note: the height of the bar is the percentage of adults with an account
GLOBAL FINDEX Digital payments Digital Payments Poorest 4 of Households vs. Wealthiest 6 of Households 86 HI-OECD 93 53 South Africa 76 52 Russian Federation 66 12 India 29 37 China 59 51 Brazil 66 Note: Red bars show percentage of adults that use an account to make or receive a digital payment in the poorest 4 of households compared to the richest 6 of households, as measured by household income.
GLOBAL FINDEX Debit Cards Use of debit cards for direct payments Did not have a debit card 10 9 8 7 6 5 4 3 2 1 14% of account holders in developing economies use a debit card Did not use a debit card Used a debit card World Developing economies East Asia & Pacific Europe & Central Asia High-income OECD economies Latin America & Caribbean Middle East South Asia Sub-Saharan Africa Note: the height of the bar is the percentage of adults with an account at a financial institution
GLOBAL FINDEX Use of Account 8 7 6 5 4 Modes of payments from accounts Nearly a quarter of adults in Turkey report using a credit card Used a debit card for direct payments 14% of adults in China report using a mobile phone to access their account Used a credit card for direct payments Used a mobile phone to make direct payments from an account 3 2 1 Turkey Brazil China India Russian Federation United States
GLOBAL FINDEX Internet Internet payments Have access to the internet at home (Don t make online payments) 9 8 7 In South Asia women are half as likely as men to have Internet access in their home Make online payments 6 5 4 3 2 1 World Developing economies East Asia & Pacific Europe & Central Asia High-income OECD economies Latin America & Caribbean Middle East South Asia Sub-Saharan Africa Note: the height of the bar is the percentage of adults with access to internet.
GLOBAL FINDEX Usage of Accounts 6 5 Wage Payments 6 of wage recipients in ECA receive wages into an account Globally, paying wages through accounts can increase the number of adults with an account by more than 300 million In cash only Into an account 4 3 Only 19% of wage recipients in South Asia receive wages into an account 2 1 East Asia & Pacific Europe & Central Asia High-income OECD economies Latin America & Caribbean Middle East South Asia Sub-Saharan Africa Developing economies World Note: the height of the bar is the percentage of adults receiving wage payments.
GLOBAL FINDEX Usage of Accounts Government Transfer Payments Globally, government transfers through accounts can increase the number of adults with an account by up to 130 million 3 2 88% of transfer recipients in Brazil receive transfers into an account In cash only Into an account 1 East Asia & Pacific Europe & Central Asia High-income OECD economies Latin America & Caribbean Middle East South Asia Sub-Saharan Africa Developing economies World Note: the height of the bar is the percentage of adults receiving government transfer payments.
GLOBAL FINDEX Usage of Accounts Agriculture payments In cash only 4 To an account 3 440 million unbanked adults in developing countries receive agricultural payments in cash 2 1 East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East South Asia Sub-Saharan Africa Developing economies Note: the height of the bar is the percentage of adults receiving agriculture payments
GLOBAL FINDEX Usage of Accounts Agriculture payments 8 7 In cash only 6 5 To an account 4 3 2 1 Kenya Tanzania Uganda Note: the height of the bar is the percentage of adults receiving agriculture payments
GLOBAL FINDEX Usage of Accounts School fee payments In cash only 4 3 Over half a billion adults in developing countries with an account pay school fees in cash over a billion adults with an account pay utility bills in cash In India, 230 million adults with an account pay school fees or utilities in cash To an account 2 1 East Asia & Pacific Europe & Central Asia Latin America & Caribbean Note: the height of the bar is the percentage of adults paying school fees. Middle East South Asia Sub-Saharan Africa Developing economies
How Can Formal Savings, Credit & Insurance Raise Income? Formal savings products can increase income by allowing households to accumulate assets; Some evidence suggests that access to formal credit and insurance can increase income and/or smooth consumption for rural farmers Savings Higher investments in business and agriculture Easier to cope with income shocks Increased women s economic empowerment through greater confidentiality and control over savings Credit Spending on education increased by 2 in Nepali households that opened free bank accounts Access to credit is associated with higher agricultural incomes and increase and/or smoother consumption for rural farming populations But ambiguous impact of credit on personal welfare like income and consumption Insurance Agricultural insurance can encourage farmers to invest in riskier crops, often resulting in higher yields
GLOBAL FINDEX Savings Savings behavior 10 9 Did not save 8 7 6 Saved in other ways 5 4 3 Saved using a community savings group 2 1 High Income: OECD China East Asia & Pacific (ex. China) India South Asia (ex. India) Europe & Central Asia Latin America & Caribbean Sub-Saharan Africa Saved using an account
GLOBAL FINDEX Financial Resilience Financial Resilience: Source of emergency funds 1.2 billion adults in developing countries say they would use savings in case of an emergency but 56% of these adults do not save at a financial institution 9 8 7 6 5 4 3 Credit/ Employer Family & Friends 2 1 Savings World Developing East Asia & Pacific Europe & Central Asia High Income: OECD Latin America & Caribbean Middle East South Asia Sub-Saharan Africa Note: the height of the bar is the percentage of adults that report being able to come up the equivalent of 1/20 th of GNI in a month.
GLOBAL FINDEX Knowledge gaps Account Ownership and GDP Per Capita 10 9 8 Account ownership (%) 7 6 5 4 3 2 1 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 GDP per capita (constant 2005 US$) What country-level factors explain the wide variations in account ownership across emerging economies Differences in the legal, regulatory, and tax environment {financial & telecom} Impact of reforms, such as new laws/regulations permitting agents, mobile money accounts, or tiered KYC
GLOBAL FINDEX Knowledge gaps Barriers to Account Ownership Do not need an account Family member already has an account Accounts too expensive Financial institutions too far away Lack of necessary documentation Lack of trust 5% 1 15% 2 25% 3 35% More opportunities to merge demand side data and geospatial data Impact of introduction/expansion of National ID s Impact of better product design to increase affordability, convenience, user take-up, etc.
GLOBAL FINDEX Knowledge gaps Usage of Accounts
GLOBAL FINDEX Knowledge gaps Gender Gap in Access to Technology Sex disaggregated data on ownership and use of accounts, mobile phones, and internet Impact of financial services on women s economic empowerment
GLOBAL FINDEX Global Findex Suite of Products Findex Notes and Working Papers Financial Inclusion Data Portal The Little Data Book on Financial Inclusion 2015 Global Financial Inclusion Microdata www.worldbank.org/globalfindex