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on Financial Literacy and Education |
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Issue of 2020‒07‒20
nine papers chosen by |
| By: | Ozili, Peterson K |
| Abstract: | This article reports the conditions for optimality in financial inclusion. The optimal level of financial inclusion is achieved when basic financial services are provided to members of the population at a price that is affordable and that price is also economically sufficient to encourage providers of financial services to provide such financial services on a continual basis. Any level of financial inclusion that does not meet these conditions is sub-optimal. The consequence of sub-optimal levels of financial inclusion are reported and I show that maintaining a sub-optimal level of financial inclusion – which is common in many countries – is incentive-inefficient both for users and suppliers of basic financial services. |
| Keywords: | financial inclusion, optimal financial inclusion, excluded population, demand-side financial inclusion, supply-side financial inclusion. |
| JEL: | O12 O17 O50 R2 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101808&r=all |
| By: | Paula Cruz-García (Department of Economic Analysis, Universitat de Valencia, Spain); María del Carmen Dircio Palacios Macedo (Universidad Popular Autónoma del Estado de Puebla, Mexico and Department of Economics, Universitat Jaume I, Castellón, Spain); Emili Tortosa-Ausina (IVIE, Valencia and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | Although in recent years there has been a growth in banking services in Mexico, there is still a significant delay in terms of financial inclusion, and it is also very uneven between municipalities. In this context, this paper analyzes the factors that determine the probability of a municipality to be financially excluded. The results show that these municipalities are characterized by a small number of inhabitants and low levels of income and education. The analysis is also carried out distinguishing between municipalities according to the region in which they are located and to their type of population. The results also show that, in general, the municipalities located in the Sur region of the country are the most affected by financial exclusion. One of the main reasons is that more than 70% of the municipalities in the Sur region are rural or in transition, being the metropolitan, semi-metropolitan and urban municipalities the least affected by financial exclusion. |
| Keywords: | Financial exclusion, Mexico, Mexican regions |
| JEL: | G21 C25 R10 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2020/19&r=all |
| By: | Corinne Deléchat; Lama Kiyasseh; Margaux MacDonald; Rui Xu |
| Abstract: | This study analyzes the drivers of the use of formal vs. informal financial services in emerging and developing countries using the 2017 Global FINDEX data. In particular, we investigate whether individuals’ choice of financial services correlates with macro-financial and macro-structural policies and conditions, in addition to individual and country characteristics. We start our analysis on middle and low-income countries, and then zoom in on sub-Saharan Africa, currently the region that most relies on informal financial services, and which has the largest uptake of mobile banking. We find robust evidence of an association between macroprudential policies and individuals’ choice of financial access after controlling for personal and country-level characteristics. In particular, macroprudential policies aimed at controlling credit supply seem to be associated with greater resort to informal financial services compared with formal, bank-based access. This highlights the importance for central bankers and financial sector regulators to consider the potential spillovers of monetary policy and financial stability measures on financial inclusion. |
| Date: | 2020–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:20/74&r=all |
| By: | Mostak Ahamed; Roxana Guti\'errez-Romero |
| Abstract: | The ongoing COVID-19 pandemic risks wiping out years of progress made in reducing global poverty. In this paper, we explore to what extent financial inclusion could help mitigate the increase in poverty using cross-country data across 78 low- and lower-middle-income countries. Unlike other recent cross-country studies, we show that financial inclusion is a key driver of poverty reduction in these countries. This effect is not direct, but indirect, by mitigating the detrimental effect that inequality has on poverty. Our findings are consistent across all the different measures of poverty used. Our forecasts suggest that the world's population living on less than $1.90 per day could increase from 8% to 14% by 2021, pushing nearly 400 million people into poverty. However, urgent improvements in financial inclusion could substantially reduce the impact on poverty. |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2006.10706&r=all |
| By: | Simplice A. Asongu (Yaounde, Cameroon); Nicholas Biekpe (Cape Town, South Africa); Danny Cassimon (University of Antwerp, Belgium) |
| Abstract: | “Replications are an important part of the research process because they allow for greater confidence in the findings†(McEwan, Carpenter & Westerman, 2018, p. 235). This study extends Lashitew, van Tulder and Liasse (2019, RP) by addressing the concern of multicollinearity that affects the signs and significance of estimated coefficients. This article investigates nexuses between innovations in mobile money and financial inclusion in developing countries. Demand and supply factors that affect the diffusion of mobile services as well as macro-level institutional and economic factors are taken on board. The empirical evidence is based on Tobit regressions. The study finds that when the empirical analysis is robust to multicollinearity, two main tendencies are apparent: the significant findings of Lashitew et al. (2019) are confirmed and many new significant estimated coefficients emerge. While this study confirms the findings of the underlying research, it also goes further to improve the harmony in narratives between the predictors and the outcome variables. Accordingly, by accounting for multicollinearity, the earlier findings are now more consistent across the set of predictors (i.e. demand and supply factors) and the attendant financial inclusion outcomes (i.e. mobile money accounts, mobile used to send money and mobile used to receive money). |
| Keywords: | Mobile money; technology diffusion; financial inclusion; inclusive innovation |
| JEL: | D10 D14 D31 D60 O30 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:20/041&r=all |
| By: | Ozili, Peterson K |
| Abstract: | This article critically examines digital finance as a pro-poor private sector intervention for international development. It examines the turn from ‘microfinance for the poor’ to ‘digital finance for the poor’. It then considers three key issues, and contest the argument that digital finance is pro-poor. Notably, proponents argue that digital finance can improve development outcomes, but this is based on weak economic logic; secondly, proponents argue that digital finance for the poor is good business - this claim is very weak because evidence suggest that digital finance is good business only with government support. The article further argues that digital finance for the poor will expose the poorest to multiple risks in the financial sector. Therefore, digital finance for the poor should be a contested enterprise. |
| Keywords: | digital finance, microfinance, financial inclusion, financial development, financial innovation, poor people, financial technology, blockchain, fintech, regtech, sandbox, access to finance, financial services |
| JEL: | O1 O12 O3 R2 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101812&r=all |
| By: | Asongu, Simplice; Odhiambo, Nicholas |
| Abstract: | This study investigates how enhancing gender inclusion affects inequality in 42 African countries for the period 2004-2014. The empirical evidence is based on the Generalized Method of Moments. Three inequality indicators are used, namely, the: Gini coefficient, Atkinson index, and Palma ratio. The two gender inclusion measurements used include female labour force participation and female employment. The following main findings are established. There are positive net effects on inequality from the enhancement of gender inclusion dynamics. An extended threshold analysis is used to assess critical masses at which further increasing gender inclusion enhances inequality. The established thresholds are: (i) 55.555 “employment to population ratio, 15+, female (%)”for the nexus with the Gini coefficient. (ii) 50 “labor force participation rate, female (% of female population ages 15+)” and between 50 to 55 “employment to population ratio, 15+, female (%)”, for the Atkinson index. (iii) 61.87 “labor force participation rate, female (% of female population ages 15+)” for the Palma ratio.These established thresholds are worthwhile for sustainable development because, beyond the critical masses, policy makers should complement the gender inclusion policy with other measures designed to reduce income inequality. Some complementary measures that can be taken on board beyond the established thresholds could focus on enhancing, inter alia: information and communication technology, infrastructural development; financial inclusion and inclusive education. |
| Keywords: | Africa; Gender; Inclusive development; Sustainable development |
| JEL: | G20 I10 I32 O40 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101102&r=all |
| By: | Ratna Sahay; Martin Cihak |
| Abstract: | Women are underrepresented at all levels of the global financial system, from depositors and borrowers to bank board members and regulators. A new study at the IMF finds that greater inclusion of women as users, providers, and regulators of financial services would have benefits beyond addressing gender inequality. Narrowing the gender gap would foster greater stability in the banking system and enhance economic growth. It could also contribute to more effective monetary and fiscal policy. New evidence suggests that greater access for women to and use of accounts for financial transactions, savings, and insurance can have both economic and societal benefits. For example, women merchants who opened a basic bank account tend to invest more in their businesses, while female-headed households often spend more on education after opening a savings account. More inclusive financial systems in turn can magnify the effectiveness of fiscal and monetary policies by broadening financial markets and the tax base. The paper also studies the large gaps between the representation of men and women in leadership positions in banks and in banking-supervision agencies worldwide. It finds that, shockingly, women accounted for less than 2 percent of financial institutions’ chief executive officers and less than 20 percent of executive board members. The analysis suggests that, controlling for relevant bank- and country-specific factors, the presence of women as well as a higher share of women on bank boards appears associated with greater financial resilience. This study also finds that a higher share of women on boards of banking-supervision agencies is associated with greater bank stability. This evidence strengthens the case for closing the gender gaps in leadership positions in finance. |
| Keywords: | Bank supervision;Banking;Economic growth;Financial stability;Gender equality;Gender;Financial inclusion;Boards of Directors |
| Date: | 2018–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfsdn:2018/005&r=all |
| By: | Asongu, Simplice; Odhiambo, Nicholas |
| Abstract: | Inequality and gender economic exclusion are major policy concerns facing sub-Saharan Africa in the post-2015 development agenda. The study provides critical masses of inequality that should not be exceeded if governance is to promote gender economic participation. The research focuses on 42 countries in sub-Saharan Africa using annual data spanning from 2004 to 2014. The empirical evidence is based on the Generalized Method of Moments. The following findings are established. First, inequality (i.e. the Gini coefficient) levels that completely nullify the positive effect of governance on female labour force participation are 0.708 for political stability, 0.601 for voice & accountability, 0.588 for government effectiveness, 0.631 for regulatory quality, 0.612 for the rule of law, and 0.550 for corruption-control. Second, inequality thresholds at which female unemployment can no longer be mitigated by governance channels include: 0.561 (for political stability) and 0.465 (for the rule of law). Third, inequality levels that completely dampen the positive impact of governance on female employment are 0.608 for political stability, 0.580 for voice & accountability, 0.581 for government effectiveness, and 0.557 for the rule of law. As the main policy implication, for good governance to promote gender economic inclusion, inequality levels should not exceed established thresholds. |
| Keywords: | Africa; Gender; Inequality; Inclusive development |
| JEL: | G20 I10 I32 O40 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101100&r=all |