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The group of 20 (G-20) recognizes data and measurement as an essential foundation for advancing financial inclusion at a global level. The data and measurement sub-group, in its first year, was tasked to identify the existing financial inclusion data landscape, to assess the data gaps, to develop key performance indicators, and to lay out the foundations for the framing of financial inclusion target setting approaches. The purpose of this report, prepared for the global partnership for financial inclusion (GPFI), is to highlight the key findings and recommendations of the data and measurement sub-group during its first year, provide input for a roadmap for the GPFI's work plan for the coming year, and to present key policy recommendations for consideration by the G-20 policy makers for the Cannes summit in November 2011. The policy recommendations presented are relevant at the global level, including both G-20 and non-G-20 countries. The GPFI holds the potential for impact on two levels: (i) incorporating guidance on measurement frameworks and prioritizations of targets through GPFI country-level pilots; and (ii) aligning on the roadmap and determining a toolkit for formulating country level targets or goals to help - operationalize GPFI's universal access vision.

Inclusive growth (IG) analysis involves analyzing the available data in a country to determine the best course of action for accelerating growth and or improving the distribution of the opportunities and benefits from the growth process. In economies in which international migration is a significant trend, that determination may be especially challenging. The international migration phenomenon can contribute to (or detract from) growth and its distribution through myriad number of complex and sometimes divergent channels, and these effects can change substantially over time. The ability to analyze these impacts, however, is often significantly handicapped by a lack of appropriate data. Moreover, because the migration decision is inherently a private decision made by households in the best interest of their welfare, determining the policy conclusions based on the results of inclusive growth analysis is often unclear. Governments are rightfully wary of interfering with the migration process. This paper examines the issue of international migration in inclusive growth. The aim is to provide the practitioners of inclusive growth diagnostics a useful framework for assessing the nature of the international migration phenomenon, and to highlight the key tools utilized in evaluating its current and potential impact on shared growth.

Over the past five years, the microcredit sector has experienced unprecedented growth. The number of borrowers served by microfinance institutions (MFIs) has increased threefold to reach 120 million clients, according to MIX estimates as of December 2009 and by other estimates the number may be as high 190 million (Microcredit Summit Campaign 2011). In large markets, such as Mexico and South Africa, commercial banks and consumer lending companies have expanded their activities to include microfinance for low-income households. Unfortunately, the growth of microcredit is not always sustainable. Some iconic markets, such as India and Bosnia Herzegovina, are experiencing large-scale credit crises, and they are not alone. The deterioration in the quality of MFI loan portfolios can be attributed to several factors. Some fast growing MFIs have outgrown their risk management systems and controls. These weaknesses have often been exacerbated by high staff turnover, leading to a further erosion of credit discipline. Rapid growth has also been focused in narrow geographies, which in turn affected borrower repayment incentives and behaviors. This report takes a fresh look at the state of credit reporting at the base of the pyramid. The data and analysis for this paper are drawn from International Finance Corporation (IFC) and Consultative Group to Assist the Poorest (CGAP) market intelligence on credit reporting systems. the lessons learned for effective credit reporting at the base of the pyramid and identifies key success factors as well as common challenges.

This technical note on access to finance addresses six questions: 1) what is the access to and use of financial services in the Philippines, how does it vary, and how does it compare to other countries? 2) What financial services are available to different market segments? 3) How do different categories of financial institutions contribute to outreach, and what is their potential to expand outreach? 4) How does the regulatory environment support access to finance? 5) What financial infrastructure is available to make credit decisions? 6) What are the results of government policies or programs to promote access to financial services? The note concludes with recommendations to improve access to finance. An estimated 30 percent of Filipinos use formal financial services. This is lower than the East Asia region average. Access to finance has improved since the 2002 Financial Sector Assessment Program (FSAP). The provision of financial services to low-income individuals has expanded. The Philippines has received international recognition for its favorable regulatory policies to promote pioneering use of mobile payments technology and its microfinance regulatory framework.

With increasing emphasis being placed on professionalism and a self-sustaining financial model, microfinance institutions are joining forces in national associations. This research explores the stated goals of these associations and the challenges they face in implementation, through content analysis and case studies of Sri Lanka and Nepal. It finds that microfinance associations are not focused solely on representing and advocating for the interests of their members. Rather, this function is often combined or even overshadowed by important capacity building services. In some cases, associations are even filling gaps in formal regulatory oversight. At the same time, they face challenges of institutionalization and heterogeneous membership.

Although a number of m-money businesses have emerged around the world, few have reached significant scale. Overall, m-money uptake is limited when contrasted with its apparent promise of reaching the unbanked and underserved, servicing existing banking clients, and being a means for realizing a cashless society. This study examines the following in more detail: existing major money flows and the critical mass of low-value, high-volume payment transactions and whether m-money can be used for them (i.e., potential demand); regulatory environment and major obstacles for m-money uptake; business models of partnering institutions; payment behavior of users and nonusers (banked and unbanked), in particular where they receive funds and how they use money, including alternative means; and existing and potential agents networks, their requirements to run m-money as a viable business, and their training needs. This report provides detailed information on Thailand regarding five main topics, business models, money flows and demand, potential user perceptions and behavior, regulation, and agent networks.

In policy discussions, it has frequently been claimed that migrants' remittances could function as a 'catalyst' for financial access among receiving households. This paper provides empirical evidence on this hypothesis from Mexico, a main receiver of remittances worldwide. Using the Mexican Family Life Survey panel (MxFLS) for 2002 and 2005, the results from the treatment-effect-model at household level show that a change in remittance status has an important impact on ownership of savings accounts and the availability of borrowing options. This effect is significant for rural, but not for urban households and important for microfinance institutions, but not for traditional banks.

Sri Lanka's population is still largely rural, nearly 85 percent lives outside of cities. There will probably be rural-to-urban migration in the future, which represents a potential opportunity to m-money providers. People working in cities often wish to repatriate their savings to their rural families conveniently and at a low cost. Income is fairly evenly spread across Sri Lanka s provinces, with the exception of the Western Province where Colombo, the largest city, is situated. Its GDP per capita places Sri Lanka near the average of comparable Southeast Asian countries. Malaysia is clearly an outlier with a considerably higher GDP per capita, but Sri Lanka s GDP is higher than that of the Philippines, where m-money has taken off dramatically. Poverty is less of a problem in Sri Lanka relative to countries like Bangladesh or Cambodia, where GDP per capita is much lower. The key point is that Sri Lanka is at a different stage in its economic development and is unlikely to have the same socioeconomic conditions that made m-money in Kenya accelerate so rapidly.

Kenya may be at a "tipping point," the theme of the third Kenya economic update which has a special focus on the transformative impact of information and communication technology (ICT) and mobile money. Over the last decade, ICT has outperformed all others sectors growing at an average of 20 percent per year. The benefits of ICT are starting to be felt in other sectors, and have contributed to the conditions for Kenya to reach this tipping point. Kenya has entered the new decade with renewed and stronger than expected growth. The passing of the new constitution, continued strong macroeconomic policies, and a favorable regional environment have created a new positive economic momentum. Kenya may again be positioned to experience high growth. Over the last three decades Kenya has experienced only two short episodes when economic growth exceeded five percent and was sustained for at least three consecutive years: 1986-88, and 2004-2007. Is Kenya again at the verge of experiencing another growth spurt? Will it last longer and go deeper than the previous two episodes?

Small and medium enterprises (SMEs) play a major role in economic development, particularly in emerging countries. Access to finance remains a key constraint to SME development in emerging economies. Closing the credit gap for formal SMEs will be less daunting than for informal SMEs. The SME finance gap is the result of a mismatch between the needs of the small firms and the supply of financial services, which typically are easier for larger firms to access. Deficiencies in the enabling environment and residual market failures have motivated government interventions to foster SME access to financing. The stocktaking exercise confirms the rise in various parts of the world of specific business models aimed at providing financial services to SMEs in a cost-effective manner. Effective SME financing models can be implemented in different country and market environments, but greater outreach is achieved in the most developed environments for the financial sector. Although SME banking and microfinance models are successfully being rolled out in an increasing number of countries and regions, equity financing remains a challenge in developing economies. The role of international finance institutions (IFIs) and development finance institutions (DFIs) to foster SME financing in the developing world has been significant so far. Increasing access to finance can only be successful if qualitative aspects are taken into account.

This paper presents a World Bank led and Russia trust fund financed work program to measure financial capability and the effectiveness of financial education in low and middle income countries. The two activities and their staging have been motivated by the lessons of high income countries with financial literacy programs and the deviating characteristics of low and middle income countries. While progress has been made in high-income countries to measure financial capability, there is little robust empirical evidence that financial education can improve it. While applying the financial capability concept in low and middle-income countries looks promising it will need to be adjusted to their characteristic and supported by innovative interventions and rigorous impact evaluation to improve it.

Microfinance has experienced increasing interest, both from public and private actors, often based on rather exaggerated expectations with regard to its developmental impact. A comprehensive framework is developed here for assessing recent changes that commercialization, new technologies and other financial market developments might mean to the poor at the regional and local levels, and applied to the case of microfinance in Peru. It is based on the review of theoretical and empirical findings as well as interviews on the relevance of financial services for the poor. The relevant dimensions, categories and indicators of outreach are identified and operationalized for assessing which kinds of financial services serve poor populations, create freedoms and opportunities and help them to cope with risks, without creating new ones. Based on Amartya Sen’s “Development as Freedom”, it is de facto access to reliable, diversified, cost-effective and tailor-made financial services which is defined as pro-poor financial sector development. The application of the framework shows that it is crucial to analyse different dimensions of outreach, namely scope, conditions and costs of financial services as well as breadth, depth and length of outreach. One financial institution might offer highly adequate products, but only in a limited geographic space, to a certain client group or at a very high price, whereas others offer cheap credit, but their service does not last long. One of the insights into pro-poor financial sector development in Peru, which has been quite positive in general terms during the last decade – is the importance of the broad scope of many different providers for attending the diversified financial management needs of (potential) microfinance clients., Öffentliche wie private Akteure verschiedenster Provenienz interessieren sich in zunehmendem Maße für Mikrofinanzen. Dieses Interesse basiert jedoch häufig auf übertriebenen Erwartungen hinsichtlich der armutsreduzierenden Wirkung von Mikrofinanzen. Da bislang nicht auf ein konzeptionell und methodisch überzeugendes Instrumentarium zur Untersuchung der Kommerzialisierung und anderen Veränderungen des (Mikro-)Finanzsektors zurückgegriffen werden kann, wird hier ein umfassender Analyserahmen zur Untersuchung von armutsreduzierender Finanzsektorentwicklung erarbeitet, der dann auf den peruanischen Fall angewendet wird. Der Analyserahmen basiert auf theoretischen und empirischen Erkenntnissen zur Relevanz von Finanzdienstleistungen für arme Bevölkerungsgruppen. Es werden die Dimensionen, Kategorien und Indikatoren vorgestellt und diskutiert um zu untersuchen, inwiefern bestimmte Typen von Finanzdienstleistungen und Finanzsektorentwicklungen armen Kunden neue Möglichkeiten bieten und ihnen dabei helfen können, besser mit Chancen und Risiken umzugehen anstatt neue Risiken zu schaffen. Mit Amartya Sen’s Ansatz, „Entwicklung“ als Eröffnung von Freiheitsräumen zu definieren, ist es in erster Linie der de facto Zugang zu verlässlichen, diversifizierten, erschwinglichen und angepassten Finanzdienstleistungen, der eine armutsorientierte Finanzsektorentwicklung ausmacht. Die Anwendung des Analyserahmens zeigt, dass bei der Analyse des Zugangs mehrere Dimensionen zu unterscheiden sind: Umfang des Angebots, Bedingungen und Kosten der angebotenen Finanzdienstleistungen sowie die Breite, Tiefe und Nachhaltigkeit des Zugangs. So bietet eine Finanzinstitution vielleicht bestens angepasste Produkte an, jedoch zu einem hohen Preis oder beschränkt auf eine bestimmte Region oder Kundengruppe. In Peru hat sich der Finanzsektor im Allgemeinen während des letzten Jahrzehnts sehr stark entwickelt, und die Armen werden besser als zuvor erreicht. Dafür ist die Bandbreite der unterschiedlichen Anbieter grundlegend, um die unterschiedlichen Finanzmanagementbedürfnisse der (potentiellen) Mikrofinanzkunden zu bedienen.

Policy emphasis has recently shifted to 'Finance for All' given evidence that financial sector development (FSD) contributes to growth but that the primary effects on poverty do not arise from pro-poor provision. This paper uses data from Financial Access Surveys carried out in 2006 in Kenya and Uganda to investigate the socio-economic, demographic and geographical factors causing access to and exclusion from formal, semi-formal and informal financial services. It approaches this from the perspective of institutional analysis. It finds, first, that social institutions do present underlying barriers to access - more so than geography - and that informal provision is extensive. These findings suggest that institutional theories of FSD need to address the role of underlying social institutions and better understand the role of informal finance, and that policy for effective outreach must similarly consider these dimensions.

To analyze the prospects for expanding financial access to the poor, bank professionals assessed 1,438 households in six provinces in Indonesia to judge their creditworthiness. About 40 percent of poor households were judged creditworthy according to the criteria of Indonesia's largest microfinance bank, but fewer than 10 percent had recently borrowed from a microbank or formal lender. Possessing collateral appeared as a minor determinant of creditworthiness, in keeping with microfinance innovations. Although these households were judged able to service loans reliably, most desired small loans. Calculations show that the bank, given its current fee structure and banking practices, would lose money when lending at the scales desired. So, while innovations have helped to extend financial access, it remains difficult to lend in small amounts and cover costs.