MICROFINANCE PAPER WRAP-UP: "The Global Findex Database: Financial Inclusion, Digital Payments and Resilience in the Age of COVID-19;" by Asli Demirguc-Kunt, Leora Klapper, Dorothe Singer, Saniya Ansar

This report presents findings from a World Bank survey of approximately 125,000 adults in 123 emerging markets regarding financial inclusion. The survey was conducted during 2021 and follows analogous surveys performed in 2011, 2014 and 2017.

Account ownership among respondents in all regions has been growing rapidly, from 51 percent in 2011 to 76 percent in 2021. The gender gap dropped from 9 percent to 6 percent over the same period. The growth in account ownership before and after 2017 varies, in that: (1) the earlier phase of growth largely occurred within China and India; and (2) the later phase of growth spans most lower- and middle-income countries.

Mobile money played a significant role in fostering financial inclusion, especially in Sub-Saharan Africa. Whereas 55 percent of respondents in the region own a financial account of any type, roughly a third own a mobile money account. Almost two in five mobile money account holders in Sub-Saharan Africa indicated they used their account for saving – a percentage nearly identical to that of individuals who hold savings accounts at other types of financial services providers, such as traditional banks and microbanks. While 35 percent of study participants in all developing countries used digital payment services in 2014, that share reached 57 percent in 2021 (compared to 95 percent in high-income states).

The authors find a correlation between people receiving online payments and their use of other financial services. In 2014, 66 percent of respondents who received a digital payment also sent at least one during the year, and that statistic rose to 83 percent in 2021. Approximately two thirds of payment recipients stored money in their accounts rather than cashing out right away. Of the 18 percent of respondents who paid utility bills via digital payments in 2021, over 30 percent of this group did so for the first time during the COVID-19 pandemic.

Among the many challenges that remain is that two in three of the unbanked adults participating in the survey indicated that they could not use a financial account without help. This reflects the need for more access to education in financial literacy and numeracy to enable people to benefit from account ownership and make potential users less susceptible to fraud.

Around 45 percent of participating adults in developing states did not believe they could access emergency funds – such as from savings, selling assets, or informal or formal borrowing – within 30 days. Medical costs were the most widespread concern, with 52 percent saying they were “very worried” about their ability to cover such expenses.

Some commonly indicated reasons for individuals not owning a financial account include the distance to financial service providers’ service points, insufficient funds and lack of identity documents. The authors argue that developing infrastructure can help to resolve these constraints and should be a priority for governments, telecommunications companies and financial institutions. They also note that increasing the usage of electronic payments can help increase account ownership.

This is a summary of a paper by Asli Demirgüç-Kunt, Leora Klapper, Dorothe Singer and Saniya Ansar; published by the World Bank; June 2022; 225 pages; available at https://www.worldbank.org/en/publication/globalfindex.

By Saulius Simonas Ramanauskas, Research Associate

Additional Resources

Global Findex Database 2021
https://www.worldbank.org/en/publication/globalfindex/Data

World Bank homepage
https://www.worldbank.org

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