<em>&gt; Posted by Kelsey Truman, HBS-Accion Program Coordinator, CFI</em>

<img class="alignright wp-image-23352" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/04/kgfs.jpg" alt="" width="330" height="185" />Domestic abuse and violence against women (VAW) are pervasive and shocking. According to the World Bank, <a href="http://www.worldbank.org/en/topic/socialdevelopment/brief/violence-against-women-and-girls">38 percent</a> of murders of women globally are committed through intimate partner violence. Globally, <a href="https://unstats.un.org/unsd/gender/chapter6/chapter6.html">one-third</a> of all women have experienced domestic or intimate partner violence. The World Health Organization even went so far as to call VAW a “<a href="http://www.who.int/mediacentre/news/releases/2013/violence_against_women_20130620/en/">global health problem of epidemic proportions</a>.” Could financial services possibly play a role in improving this situation?

One of the largest hurdles in combating VAW around the world is women’s inability or unwillingness to seek help when they find themselves in abusive situations. In conjunction with fear, one important reason many women don’t seek help rests on <a href="https://unstats.un.org/unsd/gender/downloads/Ch8_Poverty_info.pdf">their degree of financial dependency</a>. That is, they don’t have enough money or economic resources necessary to establish themselves independently, much less pay for legal fees and so forth. Furthermore, women’s vulnerability to violence has been shown to <a href="http://www.worldbank.org/en/topic/socialdevelopment/brief/violence-against-women-and-girls">increase with their relative level of poverty</a>. If women are given options to easily and discreetly pursue financial options and open bank accounts independently of their husbands and other male family members, it could very well save their lives one day.

<a href="http://documents.worldbank.org/curated/en/801311468330257772/Financial-inclusion-and-legal-discrimination-against-women-evidence-from-developing-countries">One report from the World Bank</a> found that women in developing countries like Pakistan faced multiple obstacles accessing basic financial services without at least two male guarantors. The same report goes on to find that in countries with higher VAW (like Pakistan) women are less likely to have a bank account, formal savings, or formal credit - which may further entrench them into a cycle of abuse. Therefore, financial service providers, according to <a href="https://cfi-blog.org/2014/11/03/domestic-violence-and-microfinance-what-is-our-role-as-financial-service-providers/">Bobbi Gray at Grameen Foundation</a>, have a responsibility to pursue robust financial inclusion pilots “to provide the financial services industry with a set of standardized, comparable, relevant, and reliable health indicators that they can add to the existing poverty measurements they are using to assess the impacts of their services for clients,” including in terms of VAW.

Policy and programs that pursue financial access and empowerment can help women create a tailored approach to address their particular situations. Financial inclusion initiatives, especially mobile and digital banking, can facilitate women’s access to financial services in a safe way, promoting independence. Economic empowerment through money management tools like a bank account can be a quiet VAW intervention and, if done correctly, can help afford distance between women and their abusers. MFIs and governments need to remove barriers to account accessibility to allow women to assert their financial independence.

Of course, increasing women’s access to financial services is not only the right thing to do, <a href="https://cfi-blog.org/2014/09/15/savings-groups-mobile-phones-and-a-new-solution-for-rural-women/">it is also a savvy business strategy</a>. Private enterprises like telecoms companies and MFIs benefit from expanding their client base by making mobile banking solutions available to women. And there are plenty of markets with high mobile penetration rates and proliferating mobile money services where women could readily benefit – from <a href="http://www.ebrd.com/downloads/research/economics/workingpapers/wp0136.pdf">Mongolia</a>, to <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/20153/9781464801716.pdf?sequence=1&amp;isAllowed=y">Southeast Asia</a>, <a href="http://hbswk.hbs.edu/item/female-empowerment-impact-of-a-commitment-savings-product-in-the-philippines">the Philippines</a>, <a href="http://gap.hks.harvard.edu/savings-constraints-and-microenterprise-development-evidence-field-experiment-kenya">Kenya</a>, and numerous places in between.

Bank accounts are not a silver bullet in combating VAW or women’s economic empowerment, but they help build a foundation that can give a woman more control over her own finances. Such control can be a necessary first step she takes to remove herself from abuse. And if a bank account leads to a savings account, and a line of credit, this progression adds safeguard options for emergency funds required to leave an abusive situation. Bank accounts could be the tipping point in a woman’s ability to remove herself and her family from unhealthy and possibly dangerous circumstances.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2014/11/03/domestic-violence-and-microfinance-what-is-our-role-as-financial-service-providers/">Domestic Violence and Microfinance: What Is Our Role as Financial Service Providers?</a>

<a href="https://cfi-blog.org/2014/09/15/savings-groups-mobile-phones-and-a-new-solution-for-rural-women/" target="_blank">Savings Groups, Mobile Phones, and a New Solution for Rural Women</a>

<a href="https://cfi-blog.org/2016/07/15/the-heart-and-science-of-client-assessment/">The Heart and Science of Client Assessment</a>

Can Bank Accounts Save Women's Lives? Violence Against Women and Financial Inclusion

Dominican Republic

Kenya

Mongolia

Pakistan

Philippines

Agent Banking

Policy, Regulation and Government Initiatives

Women

Blog Post

<ul>
 	<li><em><a href="http://www.centerforfinancialinclusion.org/publications-a-resources/global-microscope"><img class="alignright wp-image-22299" style="border: .5px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/10/global-microscope.png" width="265" height="338" /></a>Latin America and the Caribbean (LAC) and East and South Asia have the most conducive environments for financial inclusion. India stands out for the most progress in the last three years and is now ranked third </em></li>
 	<li><em>Further policy changes are needed if financial inclusion is to play the role envisioned in the Sustainable Development Goals</em></li>
 	<li><em>The digitization of financial services is key to increasing access to finance</em></li>
</ul>
<a href="http://www.centerforfinancialinclusion.org/publications-a-resources/global-microscope">The 2016 Global Microscope on Financial Inclusion</a> shows that essential policies for bringing financial services to low-income groups are now widespread in the developing world. Nine of the 12 financial inclusion indicators covered in the benchmarking index improved globally in 2016, building on gains which have been made during the last decade. Even so, many countries have not moved significantly beyond basic policies, and greater focus is needed if financial inclusion is to play the critical role envisioned in the Sustainable Development Goals (SDGs).

The Global Microscope is produced by The Economist Intelligence Unit (The EIU), with policy guidance and financial support from leading organisations in the field including the Center for Financial Inclusion at Accion. Now in its 10<sup>th</sup> year, the Microscope is the global standard for financial inclusion policy in developing economies.

Digitization of financial services holds great promise for improving access to finance. Overall, for the indicator on electronic payments, the average of countries' scores rose by a total of 14 points, or by 32 percent, between 2014 and 2016. This suggests widespread, positive action to create a regulatory environment more conducive to digital economic activity. Governments are also doing more to embed digitization by using it in their transfer payment programs. The Microscope report highlights examples of such transfer payments in Brazil, Mexico, Mongolia, and Uruguay.

India has shown particularly dramatic advances in its financial inclusion institutions and policies. It has, for example, set quantifiable goals for account opening for low-income families, with more than 200 million accounts opened, assisted by a national biometric identification program. The policy also emphasizes access to credit, insurance and pension facilities, as well as channeling all government benefit payments into individuals’ bank accounts to increase usage. India also has targets to provide alternative sources of access through bank branches, bank correspondents, ATMs, and satellite branches in villages of 2,000 or more residents. In addition, the Reserve Bank of India (RBI, the central bank) is working to facilitate digital money transfers through the launch of the Unified Payment Interface (UPI), and has issued guidelines to strengthen financial literacy.

Consistent with last year’s overall performance, Latin America and the Caribbean (LAC) and East and South Asia tie for the highest average overall scores by region, with LAC countries capturing four of the global top ten spots by rank. This year’s Microscope celebrates steady progress in countries that have continued to increase their commitment to financial inclusion, such as in India, Costa Rica, Honduras, and Egypt. These countries have made the biggest gains over the last three editions of the Microscope and have policies in place to continue this success.

<em>For more, read the 2016 Global Microscope report <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/global-microscope">here</a>.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2015/12/04/global-microscope-2015-progress-on-the-financial-inclusion-front/">Global Microscope 2015: Progress on the Financial Inclusion Front</a>

<a href="https://cfi-blog.org/2014/11/10/the-global-microscope-2014-results-and-surprises/">The ‘2014 Global Microscope’: Results and Surprises</a>

<a href="https://cfi-blog.org/2013/10/03/global-microscope-finds-the-world-getting-more-microfinance-friendly/">Global Microscope Finds the World Getting More Microfinance-Friendly</a>

&nbsp;

&nbsp;

2016 Global Microscope Highlights Gains in Financial Inclusion, Led by India; Digitization on the Rise

Brazil

Uruguay

Global Microscope

Enabling Environment

Financial Inclusion Strategy

Trends

<em>&gt; Posted by Center Staff</em>

<a href="https://www.flickr.com/photos/10816734@N03/2347597243/"><img class="aligncenter wp-image-17572" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/03/2347597243_9002f1fa86_o.jpg" alt="" width="616" height="414" /></a>Happy International Women’s Day! We hope you were able to partake in the worldwide celebration yesterday. If you missed out on the action, not to fear. Plenty of activities are still underway. And of course, acknowledging the achievements of women and advancing the movement for gender equality are practices best executed every day.

To spotlight the importance of financial inclusion for women, here’s a snapshot of recent research in this area. To follow are ways that you can join groups, including the United Nations and Grameen Foundation in getting involved.

In honor of International Women’s Day, last week Gallup <a href="http://www.gallup.com/poll/181790/nearly-billion-women-worldwide-struggling-suffering.aspx?utm_source=WWWV7HP&amp;utm_medium=topic&amp;utm_campaign=tiles">shared</a> global statistics on how women view their lives – graded on a 10-point scale from suffering to struggling to thriving. About a quarter of all women questioned view themselves as thriving, while the rest chose either struggling or suffering. The two areas cited most often as important for improving their lives were jobs and personal safety. While the latter is a shocking finding, this post starts with jobs, though ultimately we will see connections to personal safety as well. Global estimates pin men as almost twice as likely as women to be in full-time formal employment. In Mexico, for example, less than 50 percent of women are part of the labor force, compared to 85 percent of men.

New statistics from the NGO Action Aid <a href="http://nextbillion.net/newspost.aspx?newsid=8978">indicate</a> that gender inequality in labor markets costs developing countries about US$ 9 trillion each year, including both the pay gap and the employment gap. For a sense of scale, US$ 9 trillion is more than the combined GDPs of Britain, France, and Germany.

This said, gender equality in the economy is gaining momentum. <a href="http://www.bcg.com/media/pressreleasedetails.aspx?id=tcm:12-144605">Research</a> from the Boston Consulting Group, which identifies women as the world’s largest and fastest growing market, forecasted that between 2013 and 2018 US$ 6 trillion in additional earned income among women would be added to the global economy.

According to the Global Findex, women are <a href="http://siteresources.worldbank.org/EXTGLOBALFIN/Resources/8519638-1332259343991/N9gender.pdf">20 percent</a> less likely to be formally banked than men, and 17 percent less likely to have taken out a loan from a formal institution. Women make up the majority of the 2.5 billion unbanked individuals around the world. (Keep your eyes open next month as the Global Findex releases updated data.) A massive missed opportunity for all, women invest 90 percent of their incomes in their families, compared to 30 to 40 percent in the case of men. Additionally, recent research from Innovations for Poverty Action showed that in the Philippines when women gained access to savings accounts they in turn gained more household decision-making power.

On digital financial inclusion, last week GSMA released new figures on mobile phone ownership and use among women. It was found that <a href="http://www.vanguardngr.com/2015/03/over-1-7b-women-in-emerging-markets-do-not-own-mobile-phone-gsma-report/">1.7 billion</a> women (59 percent globally) don’t own a mobile phone, and that on average women on are 14 percent less likely to own a phone than men. These figures vary significantly by region – in South Asia, for instance, women are 38 percent less likely to own a mobile phone. Barriers identified from the customer perspective are cost; network quality and coverage; security and harassment via mobile; operator or agent trust; and literacy and confidence issues. GSMA indicates that social norms and disparities in education and income also affect gender parity in phone ownership and use. From the thousands of women interviewed as part of GSMA’s research, respondents overwhelmingly reported that they believed mobile phones would save them time, help them stay in touch with their networks, and make them feel safer. Parity in phone ownership represents a US$ 170 billion market opportunity for the mobile industry by 2020.

Savings-led microfinance interventions can help <a href="https://sswr.confex.com/sswr/2015/webprogram/Paper22658.html">reduce</a> sexual risk, new research released earlier this year finds. A recent study based in Ulaanbaatar, Mongolia tested whether HIV prevention programs would reduce sexual risk among sex workers when combined with savings-led microfinance. The randomized control trial (RCT) found that those in savings-based microfinance reduced the number of paying sexual partners by 22 percent more than the other group.

In a recent South African study, the combination of microfinance and gender training <a href="http://strive.lshtm.ac.uk/projects/maisha-microfinance-and-gender-training-reduce-violence-against-women">reduced</a> participants’ incidences of intimate partner violence (a driver of HIV) by 55 percent. Participation in the program also led to reduced household levels of poverty and increased reported condom use. The study is currently being replicated as an RCT in Tanzania to ascertain the respective impacts of the training and the financial services, as well how results will change if male partners are included in trainings.

There are lots of ways to get involved and help further financial inclusion for women. Start on the International Women’s Day <a href="http://www.internationalwomensday.com/">website</a> which lists events, a newsfeed, resources, and more.

The United Nations (UN), commemorating the 20 year anniversary of the landmark Beijing Declaration and Platform for Action, is acknowledging the progress in the past two decades and calling attention to the serious gaps that remain. You can get involved in #Beijing20 as outlined on its <a href="http://beijing20.unwomen.org/en/get-involved">campaign website</a>, using social media toolkits, quizzes, essay competitions, and film festivals.

Targeting governments, yesterday the UN launched “<a href="http://www.unwomen.org/en/news/in-focus/international-womens-day#sthash.fSs7r8bg.dpuf">Planet 50-50 by 2030: Step It Up for Gender Equality</a>”, which asks governments to make national commitments to address the barriers that hold women and girls back from realizing their potential.

Within the microfinance community, Grameen Foundation is hosting the <a href="https://www.classy.org/events/250-challenge-2015/e43767">$2.50 Challenge</a>, where participants experience what it’s like to live like one of the women who make up 70 percent of the world’s poor. Women’s World Banking organized the <a href="http://www.womensworldbanking.org/events/attend-an-event/making-happen-women-international-womens-day-campaign/">Making It Happen for Women</a> campaign, which enables people around the world to share how they’re working to advance women’s empowerment.

<em>Image credit: <a href="https://www.flickr.com/photos/10816734@N03/2347597243/" target="_blank">World Bank</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/09/15/savings-groups-mobile-phones-and-a-new-solution-for-rural-women/" target="_blank">Savings Groups, Mobile Phones, and a New Solution for Rural Women</a>

<a href="http://cfi-blog.org/2014/01/08/why-the-gender-dummy-doesnt-speak-explaining-the-gender-gap-in-financial-inclusion/" target="_blank">Why the Gender Dummy Doesn't Speak: Explaining the Gender Gap in Financial Inclusion</a>

<a href="http://cfi-blog.org/2014/09/11/more-women-on-boards-how-do-we-get-there/" target="_blank">More Women on Boards: How Do We Get There?</a>

Every Day, Working Towards Financial Inclusion for Women

France

Germany

United Kingdom

International Women's Day

Mobile Banking

<em>&gt; Posted by the Microfinance CEO Working Group</em>

<em>The following post was <a href="http://microfinanceceoworkinggroup.org/?p=1095" target="_blank">originally published</a> on the Microfinance CEO Working Group blog.</em>

<a href="http://microfinanceceoworkinggroup.org/"><img class="alignright wp-image-15821 size-medium" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2014/08/mcwg-logo.png?w=300" alt="" width="300" height="59" /></a>The <a href="https://www.aeaweb.org/articles.php?doi=10.1257/app.7.1"><i>American Economic Journal</i></a> has published an issue dedicated to six new studies measuring the impact of microcredit. Through a series of randomized control trials (RCTs), researchers have identified some of the effects of expanded access to microcredit on borrowers and communities in Bosnia, Ethiopia, India, Mexico, Mongolia, and Morocco.

The researchers reported evidence of positive impacts of microcredit on occupational choice, business scale, consumption choice, female decision power, and improved risk management, but did not report clear evidence of reduction in poverty or substantial improvements in living standards. “These results,” conclude the authors, “suggest that although microcredit may not be transformative in the sense of lifting people or communities out of poverty, it does afford people more freedom in their choices… and the possibility of being self-reliant.”

As microfinance practitioners, we acknowledge and appreciate the importance of such research and study the data carefully. Such studies play an important role in helping to measure our efforts and guiding us in improving our practices. They lead us to examine our work carefully, refine our theories of change, and set expectations for how that change might occur. They lead us to cast a critical eye toward the products and services we develop.

Many microfinance institutions believe that microcredit, especially when combined with additional financial products like savings and insurance as well as non-financial services like health care, can have significant impacts on the lives of the poor and pursue such impacts as part of their organizational missions. These six studies do not address the impact of many other promising non-credit microfinance activities, although a number of other studies do. “MFIs now increasingly focus on savings, not just credit,” the authors note, “and the evidence from randomized evaluations of micro-savings is quite promising.”

Impact studies and their methodologies will continue to be debated both within and without the industry. Wise practitioners will use the data from RCTs, financial diaries, and traditional forms of market research to become more innovative, responsive, client-centered, and dedicated to developing high-quality products and services, especially products beyond microcredit.

Intuitively, the principles of microfinance make sense: better financial services facilitate economic activity, particularly where those services aren’t reliable or never existed. But, intuition alone isn’t enough, whether for individual donors, corporate foundations, government agencies or investors – indeed, for anyone who seeks to effect social change with their support. Data like these complement our intuition and compel us to maintain our commitment to upholding our organizations to the highest standards.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/08/19/on-the-pathway-to-responsible-microfinance-an-update-on-the-microfinance-ceo-working-groups-progress/" target="_blank">On the Pathway to Responsible Microfinance: An Update on the Microfinance CEO Working Group's Progress</a>

<a href="http://cfi-blog.org/2014/05/19/new-microfinance-ceo-working-group-papers-examine-causes-and-potential-remedies-for-over-indebtedness/" target="_blank">New Microfinance CEO Working Group Papers Examine Causes and Potential Remedies for Over-Indebtedness</a>

<a href="http://cfi-blog.org/2014/04/09/microfinance-does-health-care/" target="_blank">Microfinance Does Health Care</a>

Measuring the Impact of Microcredit – Six New Studies

Bosnia and Herzegovina

Ethiopia

Morocco

Insurance

Microfinance

Financial inclusion stories and research are published daily, lauding various efforts to bring lower-income people into the formal banking fold. All progress deserves celebration, but also closer examination. When a new initiative takes effect, or a new service deployed, how does that advance us in achieving financial inclusion? A backdrop of sound measurement is critical. A BBVA research team, Noelia Cámara and David Tuesta, recently set out to construct an index that measures the extent of financial inclusion at the country or region level. The index is discussed and applied to 82 countries in the team’s new paper, <a href="https://www.bbvaresearch.com/en/publicaciones/measuring-financial-inclusion-a-multidimensional-index/"><em>Measuring Financial Inclusion: A Multidimensional Index</em></a>. We were especially intrigued to learn that this research incorporates both supply and demand-side data. I recently sat down with Cámara to talk about the project, from challenges in measuring financial inclusion to the implications of the newly-available index.
<h4>1. What are the challenges in measuring financial inclusion?</h4>
Many issues arise when it comes to measuring financial inclusion. First, there is no single definition for financial inclusion universally accepted in the literature. Most definitions include three dimensions: use, quality, and access. However, when it comes to defining these dimensions, no consensus is found. For instance, the use of financial services is part of the financial inclusion concept, but it is not clear what "use of financial services" really means. Thus, several questions come to the fore: Do we consider having a bank account in the formal financial system to be a necessary condition for financial inclusion? Is having a pre-paid card or microinsurance enough to classify an individual as included? Is using electronic payment intermediation (e.g. paying bills with a mobile phone) a sufficient condition?

Second, and this may be the most important challenge to be addressed in the near future, there is a lack of harmonized data. For example, measuring access can be approached by assessing the number of bank branches and ATMs, but there isn’t always information available about the number of banking correspondents’ outlets. There is also access to financial services through mobile phones and electronic devices like laptops and smartphones. However, having a mobile phone or a computer is not a sufficient condition for access to the financial system; in order to generate broader access and foster financial inclusion, many other things such as regulation, new financial digital channels, or infrastructure are necessary. Finding workable data and measuring these elements of access is difficult. These challenges very much apply to measuring the quality of financial services in a given market, as well.
<h4><strong>2. What dimensions do</strong> you<strong> use to measure financial inclusion? Which dimensions are more important than others?</strong></h4>
We postulate that the degree of financial inclusion is determined by the three dimensions of usage, barriers, and access. Barriers are used as a proxy for the quality dimension. We define an inclusive financial system as one that maximizes usage and access, while minimizing involuntary exclusion. Involuntary financial exclusion is measured by a set of barriers perceived by those individuals who do not participate in the formal financial system.

The weights of the variables in our index are calculated endogenously, by applying a technique called Principal Component Analysis (PCA) in two stages. As shown by our estimates, access is the most important dimension for measuring the level of financial inclusion (0.42). Access represents a necessary but not sufficient condition for using formal financial services. The weight for the usage dimension is 0.29, and for barriers it is 0.28.
<h4>3. Which counties performed well and which performed poorly?</h4>
As expected, developed countries have the most inclusive financial systems, and the African countries are more financially excluded. There are some exceptions among developing countries, such as Mongolia and Thailand, which perform relatively well.
<h4>4. Your study is unique in that it combines both supply and demand-side data sets. What are the limitations of relying on supply-side data?</h4>
Supply-side data is only accurate in measuring some aspects of financial inclusion, such as access. These data are not conclusive in terms of measuring use of financial services. For instance, with number of bank accounts, we have no information about how these figures are distributed among the population. Supply-side data may overestimate the inclusiveness of financial systems, as one person can have more than one account or loan, which is a very common practice in developed countries. By contrast, having individual micro-data for the demand-side is desirable because it enables us to identify who is actually using the financial services.
<h4><strong>5. You write that "We find that the degree of financial inclusion is highly correlated with some macroeconomic variables such as GDP per capita, education, efficiency of</strong> a<strong> financial system, and financial stability." What do you think the policy implications are since financial inclusion is so intertwined with broader economic and social issues?</strong></h4>
Talking about policy implications from a macroeconomic perspective needs further analysis to check for causality. What we illustrate in our study is that some important macroeconomic variables such as GDP per capita, education, efficiency of a financial system, and financial stability perform similarly with financial inclusion, which then shows that a causal relationship <em>may</em> exist.
<h4>6. At CFI, we are very much focused on the quality of services provided to the base of the pyramid, and client protection in particular. Where do you see the role of more qualitative issues like client protection in measuring financial inclusion?</h4>
The quality dimension is, so far, the most difficult of financial inclusion to measure. As I mentioned earlier, in our index we try to approach quality of financial services by the perceptions of excluded people. Particularly, the variable trying to proxy the lack of trust in the financial system should capture part of this client protection information. We are aware that this is only a partial approach, particularly since only excluded people provide answers to this question. Our current research focuses on improving the measurement of the quality dimension.
<h4><strong>7. As you may know, the CFI has defined financial inclusion as a state in which "everyone who can use them has access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, with respect and dignity. Financial services are delivered by a range of providers, in a stable,</strong> competitive<strong> market to financially capable clients." How do you feel this definition corresponds to your index and research and in what ways do they diverge/differ?</strong></h4>
The CFI’s definition for financial inclusion includes the three dimensions that we use to define financial inclusion, with quality-related issues included only partially from the perception of excluded people. There are also some aspects such as “respect and dignity” that we are unable to measure with the available information.

The only divergence between the CFI’s definition and our index is the inclusion of the financial capability concept. This is a broad concept that is difficult to define. It includes financial literacy, learning by using financial services, having the money to use the services, and so forth. Financial capability is not only difficult to measure for all the countries in our sample, but we also consider financial capability as a variable related to financial inclusion, rather than one to be included in the financial inclusion measurement. We believe that financial capability could be either a cause or a consequence of financial inclusion.
<h4><strong>8. What about the</strong> role<strong> of insurance, pensions, and other financial services not accounted for in the index?</strong></h4>
There are different degrees of financial inclusion. Our index is a basic measure that can be interpreted as a lower bound. We consider a financially included individual as having one of the following financial products: a bank account, savings account, or loan. Although other financial products such as pensions and insurance are important, we do not consider an individual to be financially included if holding only insurance with none of the previous specific financial products.
<h4>9. Were there any surprises in your research?</h4>
Surprises are common when creating an index. One may have a general idea about the ranking of a group of countries, however, there are always surprises. In our case, Mongolia and Thailand rank much better than expected. These two low-income Asian countries outperform other low-to-middle income countries, their East Asian neighbors, and even some high-income countries. For Mongolia, the degree of financial inclusion in the country is even higher than developed countries such as Sweden, Ireland, and Austria. It may be due in large part to universal cash hand-outs from the government. Thailand, which is ranked higher than Greece, has a high position in the ranking mainly due to the large number of bank accounts and the insurance schemes offered by the government.
<h4>10. What gaps in research still remain and which do you think are the most important to address?</h4>
For measurement issues, the quality of the data is the most important challenge that we need to address. Working on improving quality and generating accurate data are key for improving the measurement of financial inclusion. Big data generated by financial institutions (provided in an aggregated manner) should substantially improve the measurement of the three inclusion dimensions. Examples of such provider-generated data might include information regarding the range of financial services used by income group and access to financial services by channel. On the other hand, information about the unbanked is only possible through surveys.

Theoretical research and industry alignment is important in terms of operationalizing and acceptance of a definition of financial inclusion. Identifying how mechanisms behind financial inclusion work may help to reach a single, commonly accepted definition.

<strong>Have You Read?</strong>

<a href="http://cfi-blog.org/2012/11/16/measuring-financial-inclusion-the-basic-set-solution/" target="_blank" rel="noopener">Measuring Financial Inclusion: The 'Basic Set' Solution</a>

<a href="http://cfi-blog.org/2014/08/11/lean-research-is-it-time-to-reimagine-the-study-of-financial-inclusion/" target="_blank" rel="noopener">Lean Research - Is It Time to Reimagine the Study of Financial Inclusion?</a>

<a href="http://cfi-blog.org/2014/08/06/reality-check-three-ways-we-hype-up-financial-inclusion-break-throughs/" target="_blank" rel="noopener">Reality Check: Three Ways We Hype Financial Inclusion Breakthroughs</a>

Measuring ‘Financial Inclusion’ with a Multidimensional Index: A Conversation with Noelia Cámara, BBVA

Thailand

Alternative Data

Data Analytics

Digital Financial Services

Financial Capability

Payments

Pensions and Retirement Saving

<em>&gt; Posted by Jeffrey Riecke, Communications Associate, CFI</em>

In addition to its other benefits, microfinance can be a vehicle for promoting environmentally sustainable development. Small-scale finance, when bundled with other services, can improve access to clean energy for people at the base of the pyramid, and can assist them to protect ecosystems, conserve biodiversity, and adapt to climate change. And for the poor, climate change mitigation and adaptation is critical. Although poor people have contributed the least to climate change, <a href="http://www.theguardian.com/environment/2014/mar/31/climate-change-poor-suffer-most-un-report">according to the United Nations</a>, they will suffer its effects in the biggest way. Though still a burgeoning area, a number of microfinance institutions are effectively pairing microfinance and environmental action, including Kompanion Financial Group in Kyrgyzstan, ESAF Microfinance in India, and XacBank in Mongolia. A few weeks ago at <a href="http://www.e-mfp.eu/microfinance-week" target="_blank">European Microfinance Week</a> (EMW) these three institutions were acknowledged for their work in this area, with Kompanion winning the 5<sup>th</sup> European Microfinance and Environment Award, and ESAF and XacBank placing as runner-ups.

The Microfinance and Environment Award, launched in 2005, recognizes institutions committed to serving the poor while contributing to environmental sustainability. It’s jointly organized by the Development Cooperation Directorate, the European Microfinance Platform (e-MFP), and the Inclusive Finance Network Luxembourg in collaboration with the European Investment Bank. Below is a snapshot of the environmental efforts of the three institutions, featuring the videos that were shown at EMW.

[youtube https://www.youtube.com/watch?v=Mes2EMFWMpc&amp;w=560&amp;h=315]

<strong>Kompanion Financial Group (Kyrgyzstan)</strong>

In Kyrgyzstan, environmental degradation is rampant due to decades of poor agricultural practices and land management. Kompanion’s Training on Pasture Land Management initiative offers “credits for conservation” to farmers, which are loans linked to a training program that includes sustainable land management practices and helps restore damaged land.

[youtube https://www.youtube.com/watch?v=6IoFob3GwXo&amp;w=560&amp;h=315]

<strong>ESAF Microfinance (India)</strong>

The majority of ESAF’s clients in rural areas lack access to clean energy or clean water, and most suffer from homes that are severely polluted from inefficient cooking appliances. The MFI’s Clean Energy for the Poor initiative provides financing to help individuals acquire solar energy equipment, energy efficient stoves, and water filters.

[youtube https://www.youtube.com/watch?v=1V6IUvo0yq8&amp;w=560&amp;h=315]

<strong>XacBank (Mongolia)</strong>

XacBank’s Eco Program has facilitated the purchasing of over 150,000 energy efficient heating units and insulation products in the country’s capital, Ulaanbaatar. The products bring great benefits, as winters in the capital last nine months. With many households using inefficient, dilapidated heating systems, families spend an average of 40 percent of their income on heating.

<em>Video credit: <a href="https://www.youtube.com/channel/UCQNtU3oBMayR6BBs_iVanLQ" target="_blank">Inclusive Finance Network Luxembourg</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/07/15/somalia-facing-drought-with-fewer-remittance-lifelines/" target="_blank">Somalia: Facing Drought with Fewer Remittance Lifelines</a>

<a href="http://cfi-blog.org/2014/04/24/new-council-to-expand-responsible-financing-for-agriculture/" target="_blank">New Council to Expand Responsible Financing for Agriculture</a>

<a href="http://cfi-blog.org/2013/08/28/the-synergy-potential-of-financial-and-energy-inclusion/" target="_blank">The Synergy Potential of Financial and Energy Inclusion </a>

MFIs in Kyrgyzstan, India, and Mongolia Lead in Environmental Sustainability Efforts

Kyrgyz Republic

Credit

Energy Finance

<em>&gt; Posted by Center Staff</em>
<img class="alignright size-full wp-image-2763" title="5" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2011/02/5.gif" alt="" width="100" height="100" />Andhra Pradesh's shadow is long, and particularly dark where it falls across the media. But beyond the bleaker headlines are stories of a different kind, about countries where microfinance is working.
The Center's managing director, Beth Rhyne, this week published an article on this topic in<em> The China Daily</em>. It may cast a new light on microfinance for the newspaper's nearly 400,000 readers, many of whom hail from Asia's business and investor community.
Here are some excerpts from "Five Countries Where Microfinance Works":
<ul>
 	<li>"Indian policymakers created a perfect storm for a microfinance shipwreck ... MFIs, locked out of the ability to provide a range of services, had no other channel for growth than unbridled credit expansion."</li>
 	<li>"Tiny Bolivia got many things right ... competition between ... strong institutions brought interest rates in Bolivia below 20 percent, among the lowest microfinance rates in the world."</li>
 	<li>"Cambodia and Mongolia followed Bolivia’s example. Acleda Bank in Cambodia and Xac Bank in Mongolia ... added savings and other services, offering a solid range of products."</li>
 	<li>"Indonesia showed what a state-owned bank can do ... Bank Rakyat Indonesia now serves tens of millions of clients, has been profitable since it began, and has never experienced a significant crisis of over-lending."</li>
 	<li>"The government’s nurturing approach led the Economist Intelligence Unit to rank the Philippines second in the world in its “Global microscope on the microfinance business environment 2010.”</li>
</ul>
To access the entire article, please click <a href="http://www.cdeclips.com/files/asiapdf/20110218/cdasiaweekly20110218p14.pdf" target="_blank" rel="noopener">here</a>.
<i>For more information, <a href="http://bit.ly/FI2020signup">sign up for updates</a> from the Financial Inclusion 2020 campaign.</i>

5 Countries Where Microfinance Works

Bolivia

Cambodia

Financial Inclusion 2020

Eric Zuehlke

Kelsey Truman

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