Week of July 15, 2013

We have a special bonus edition of New & Noteworthy this week with a new report on the stats of global financial inclusion, various perspectives on the challenges of mobile money adoption, and an ongoing debate on a possible repayment crisis in Tamil Nadu.

  • This week CGAP released its Financial Access 2012 report, a comprehensive view of access to financial services and financial inclusion around the world based on eight years of data from the IMF’s Financial Access Survey (FAS).
     
  • Challenges in mobile banking and payments was definitely a hot topic this week:
    • As new products like Square Wallet make payments incredibly convenient and practically invisible, Elizabeth Dunn and Michael Norton question the value on spending habits and happiness levels;
    • Ignacio Mas explores the demand and supply factors into why the progress of mobile money has not been a smooth one for CGAP (and continues the conversation in the blog comments.);
    • Felix Salmon asserts his skepticism that mobile payments will replace credit cards in the US;
    • And new research highlights some of the hidden costs and social meaning of mobile payments  for the poor in Kenya.
  • Fast Company posted some fascinating infographics displaying the world’s airports as a measure of global inequality.
  • The Family Budget Calculator from the Economic Policy Institute measures the income a family in the US needs in order to attain a secure yet modest living standard by estimating community-specific expenses. You can see what a city or town requires but in all cases, families need more than twice the income of the federal poverty line to make ends meet.
     
  • Recently on the FAI Blog, Daniel Rozas discussed avoiding a potential repayment crisis in Chiapas, Mexico. At the same time, a similar debate is occurring regarding repayment issues in the Indian state of Tamil Nadu:
     
  • In a compelling blog post for CGAP, Kim Wilson imagines a global financial ecosystem that combines the “transparency, safety, convenience, reliability, fair pricing, and privacy” of formal banking institutions without the expenses of that system. She asserts that technology could be harnessed to make this vision a reality.
     
  • CRISIL of India released the results of its Inclusix project, a “comprehensive index for measuring the progress of financial inclusion in the country, down to the district-level.” Data collected between 2009-2011show an under-penetration of formal banking across India and an overall country score of40 on a scale of 100.
     
  • A recent study from the Institute for Children, Poverty, and Homelessness highlights a neglected part of the gentrification debate - why displacement of residents can lead to increased homelessness. The research concludes that low-income families priced out of trendy neighborhoods create intense competition in economically depressed areas. As The New York Times points out, “in a scenario like this one…the poor are not simply competing with wealthier newcomers for limited housing; the poor are competing with one another.”
  • As companies move away from paper paychecks and direct deposit, hourly workers are feeling the pinch of fees from prepaid cards, according to the The New York Times. In some instances, workers end up making less than minimum wage after these fees are taken into account.
     
  • Legislators and policy makers often try to promote “good” behavior through economic or other incentives but Evan Selinger explores when encouraging certain behavior becomes coercive in "When Nudge Comes to Shove."

Week of July 8, 2013

This week’s New & Noteworthy covers two weeks due to the July 4th holiday in the US. The list is long and includes: some great visualizations of how the world’s population will grow in the future and what it currently eats in the present; lots of new information about the evolution and future of microinsurance; a new paper on the long-term impact of savings subsidies and intra-household bargaining; financial inclusion and the development agenda; and research on the downside of electronic payments.

  • Kristie Wang of Ashoka reviews new microinsurance products that offer more specialized services like coverage for chronic disease, options for frequent, low-cost health issues, and subsidized preventative care.
  • Can a short-term increase in savings have long-term impacts? Simone Schaner sought to answer that question through a RCT in rural Kenya. Her research focuses on the impact of interest subsidies on household finances and shows some promising results. David McKenzie shares his perspective on the findings on the Development Impact blog.
     
  • Social entrepreneurship is an increasingly trendy field but Daniel Ben-Horin challenges the sector to remember the less sexy, day-to-day work and lasting commitment that is required to be sustainable in parts one and two of his series for Stanford’s Social Innovation Review.
     
  • Elizabeth Rhyne, Managing Director of the Center for Financial Inclusion, reviews the recommendations from the recent High-Level Panel of Eminent Persons on the Post-2015 Development Agenda, specifically the incorporation (or lack thereof) of the role of financial inclusion.
     
  • The Loss and Damage in Vulnerable Countries Initiative released a new review of the microinsurance landscape in Bangladesh, highlighting the potential for customized products to address the negative impacts of climate change, particularly among the poor. 
     
  • This Washington Post article reviews a recent study from the Consumer Financial Protection Bureau on overdraft programs from the nation’s banks.
     
  • The SWIFT Institute released a summary of its spring conference on financial inclusion at Harvard’s Kennedy School of Government.
     
  • Ignacio Mas, an FAI affiliate, questions the common belief that the poor need financial education in his recent blog post for the World Bank’s Private Sector Development blog.
     
  • A fascinating photo essay from Peter Menzel shows what a week’s worth of groceries looks like around the world.
     
  • In 2050, India will surpass China as the most populous nation in the world according the UN’s latest population projections.
     
  • Women’s World Banking released a manual to provide guidance for MFIs on implementing its Gender Performance Indicators. These indicators are meant to improve outreach and service delivery for women borrowers.
     
  • Azuri Technologies developed and manufactures the IndiGo solar kit, which is available for purchase in Kenya via mobile phone. After an initial deposit of 1,000 shillings (roughly $11), users make weekly payments before fully owning the system.
     
  • Derek Thompson of The Atlantic provides an overview of research that claims that the use of electronic payments technology (such as credit cards) versus cash makes it harder for people to make sound financial decisions and stick to budgets.

Week of June 17, 2013

This week, experts in the field explore the pros and cons of mobile money, the relationship between migration and microfinance, and new strategies to social investment.

  • Maryann Bylander of the Migration Policy Institute explores the relationship between migration and microfinance and the growth of the “migra-loan” – a fusion of remittances and credit products.
     
  • This article in American Banker explores the potential effect of the Affordable Care Act on the unbanked should insurers require customers to pay via checking account and not electronic means.
     
  • Tina Rosenberg’s opinion piece in The New York Times reviews the potential pros and cons of the emerging Development Impact Bond, a new twist on Social Impact Bonds that are backed by development agencies or foundations.
     
  • Both FAI Affiliate Ignacio Mas and Susie Lonie discuss the gap between the high expectations of mobile money networks and the realities of implementation.
     
  • This Guardian piece offers an overview of social finance strategies aimed at helping small-scale farmers in the developing world.
     
  • While mobile money has seen success in places like Kenya, there are risks of opening channels to criminal activity like money laundering, argues Josh Meyer for Quartz.com.
     
  • A UK company is launching Randomise Me, an online tool for anyone to set up their own RCT. The vision is that Randomise Me will be the RCT equivalent of Survey Gizmo or Survey Monkey.
  • Researchers from the Univeristy of Michigan and Universidad Francisco Marroquín in Guatemala released results from an RCT on educational subsidies and migrant remittances. The study found that the subsidies (in the form of matching grants) led to increases in educational spending and higher private school attendance for youths is El Salvador connected to migrant study participants.
     
  • Barbara Magnoni recently asked if microinsurance "pays off for the poor” while also highlighting the work of the MILK Project.

Week of June 10, 2013

This week’s “New & Noteworthy” includes a report on rising income and demand for financial services, the impact of “big data” on poverty measurements, and responses to the G8 meeting on impact investing.

  • The Center for Financial Inclusion released Growing Income, Growing Inclusion, its second report from its Mapping the Invisible Market initiative. This report proposes that over the next decade, worldwide income growth will propel millions out of poverty and into the “vulnerable class” of $4-$10 a day income levels and increase demand for formal financial services.
  • Emma Samman, a research fellow at ODI, responded in The Guardian to the release of a report by the UN high level panel on the post-2015 development agenda, which endorses new data-collection methods in development. The author advises that governments, researchers, and practitioners should combine new technologies with traditional, in-depth household surveys to increase the robustness and accuracy of data collection.
  • In another response piece by ODI, Emmanuel Letouzé discusses the potential (and challenges) of using “big data” for monitoring and measuring poverty.
  • Researchers from the IFPRI published an update to a 2012 working paper that shows Brazil’s Bolsa Famillia conditional cash transfer program significant increases urban women’s decision-making power regarding contraception use, children’s school attendance, and health expenses.
  • This report from EUFFI summarizes results from a survey implemented in France, Italy, Poland, Sweden and the United Kingdom showing that new means of payment that require a bank account (debit cards, internet banking, etc.) are not as accessible as cash and usually have additional requirements like ID cards and good credit history.
     
  • Ben Thornley offers his “five takeaways” from the recent G8 meeting on social impact investing.
  • A new study from the Microinsurance Network seeks to address the role of microinsurance within social protection systems and notes that very few countries are having these conversations.

Week of June 3, 2013

Electronic banking, social enterprise incubators, and global financial inclusion are all in this week’s round up of what is new and notable in the field.

  • In her blog post for CFI, Elizabeth Davidson discusses the recent movement to regulate Walmart’s activities in the financial sector, specifically its Bluebird prepaid card service. Davidson highlights a parallel example of the expansion of Banco Azteca in Mexico and its function as a “gateway” to larger, more traditional financial institutions for the poor.
     
  • Together with Village Capital, The Aspen Institute released a review of the role of accelerators and incubators in the social enterprise and impact investing arenas. The report claims it’s the first quantitative assessment of the impact accelerator landscape and surveys 52 organizations worldwide.
  • The Center for Technology Innovation at Brookings recently hosted a forum to explore the impact of mobile devices on business practices and entrepreneurship in the developing world.

  • A new report published by the National Council of La Raza, a Hispanic civil rights and advocacy organization, found evidence of a link between citizenship and increased financial inclusion.

  • Isobel Coleman, Senior Fellow and Director of the Civil Society at the Council on Foreign Relations, recently hosted a forum to discuss how to reach the two billion people who do not have access to formal financial services. She also wrote a complementary article on the event for the CFR blog.

  • Felix Salmon, who is currently attending the Underbanked Financial Services Forum in Miami, shared his thoughts on mobile check-cashing and what it means for the unbanked.

  • Last but certainly not least, the US Financial Diaries project posted profiles of six households participating in the study, which promises a timely and independent look at how low- and moderate-income Americans are managing their financial lives.

Week of May 31, 2013: US Edition

This is the inaugral edition of New & Noteworthy: United States. This week's installment includes new research on breadwinner moms, a report on the installment loan industry and a story about bulk buying as an investment technique and alternative to savings.

  • ProPublica recently published an investigative report on the practices of the installment loan industry, specifically highlighting the effect of the loans on low-income borrowers and the regulatory issues facing lenders.
     
  • Breadwinner Moms, a new report from Pew Research shows the percentage of married and single breadwinner mothers, and single, have grown in size in the past five decades. Of all households with children younger than 18, the share of married mothers who out-earn their husbands has gone up from 4% in 1960 to 15% in 2011 while the share of families led by single mothers tripled (from 7% to 25% during the same time period).
     
  • Economist Russ Roberts joins NPR’s Uri Berliner in a trip through the wholesale market to explain the theory behind using bulk buying as an investment technique and alternative to savings. According to Roberts, low inflation rates of 1.7% still outpace the average savings account and if inflation rises in the near future, goods bought today could be worth more in the future often generating higher rates of returns than current investment options.

Week of May 31, 2013

This week’s mostly new and definitely notable list includes a new report on health insurance in Ghana, investigations into calculating global poverty figures, and new thoughts on financial inclusion.
 

  • Recently the Consortium on Financial Systems and Poverty sat down with Emmanuel Maliti, a researcher and seed grant recipient, to discuss his work in Tanzania. Maliti is investigating the efficacy of direct and indirect punishments on repayment performance among informal savings groups in Dar es Salaam.
  • In this article for the Boston Review, Pranab Bardhan reviews four books on development and poverty alleviation released in the last few years and compares two major approaches - the macro-political camp versus the micro experimentalists.
  • CGAP released the third blog post in its series highlighting themes from its recently approved five-year strategic plan. This installment describes CGAP’s approach to “building an enabling and protective policy environment” for financial inclusion and includes video clips from interviews with Philippine central bank Deputy Governor Nestor Espenilla and his colleague Pia Roman.   
  • A new report from the ILO Microinsurance Innovation Facility evaluates the impact of consumer education on health insurance enrolment in Ghana. Researchers found evidence that convenience of registration and timing of premium payments were more common challenges to enrolment than lack of knowledge of health insurance. See also FAI’s Jonathan Bauchet on an experiment marketing life insurance in Mexico. In a forthcoming paper, Bauchet discusses evidence from a natural experiment that ease of payment was a major factor in insurance purchases.
  • MicroSave released a report this week exploring the role of information sources in poor household’s decision-making processes. Researchers review what decision making paths people use to reach a decision, and how information sources accessible to them influence the process in an effort to inform better approaches for increasing financial literacy.
  • The World Bank released a working paper, authored by Asli Demirguc-Kunt, Leora Klapper, and Dorothe Singer, documenting and analyzing gender differences in the use of financial services using data from 98 developing countries. The data, drawn from the Global Financial Inclusion (Global Findex) database, highlights the existence of significant gender gaps in ownership of accounts as well as usage of savings and credit products.
  • Using a RCT of a large-scale micro-entrepreneurship program in Chile, the Consortium on Financial Systems and Poverty assessed the effectiveness s of training and asset transfers on individuals’’ employment and income. The results of the research indicate an increase in both for participants in the program. 
  • In a recent blog post for the Center for Financial Inclusion, Ignacio Mas makes the case that financial inclusion involves both formal and informal channels. He uses a cake analogy "to represent the idea of platforms, of capabilities arranged horizontally and interworking with each other." 

Week of May 23, 2013

Below are the latest and greatest articles, reports, and research from the field of microfinance and economic development. From remittances in Asia to microinsurance in Africa, it’s definitely been an interesting week!

Center for Financial Inclusion, "M-Pesa Launches in India," May 15, 2013
M-Pesa launched in India last month and will be conducted through a partnership between Vodafone and ICICI Bank. The service will roll out in phases, beginning with the eastern areas of the country. The first phase includes a network of 8,300 agents and will include cash deposits, withdrawals, money transfers, airtime top-ups, bill payment services, and the ability to make purchases at select stores.

Michael J. McCord, et al., The Landscape of Microinsurance in Africa - 2012, The Microinsurance Center, May 16, 2013
ABSTRACT: This landscape study aims to describe the current state of, and recent trends in, microinsurance in Africa. A total of 214 respondents from 39 countries where microinsurance was identified provided data for 511 providers and 598 products. The study identifies gaps in access to and the supply of microinsurance, as well as key bottlenecks to sustainable expansion of the sector. Its ultimate goal is to help industry stakeholders – insurers, delivery channels, policy makers, regulators, donors and others – identify areas for improvements that will eventually lead to better products and services for low-income clients.

The Wall Street Journal, "Number of the Week: Class of 2013, Most Indebted Ever," May 18, 2013
The average debt load for each borrower receiving a bachelor’s degree this year is about $30,000, according to an recent analysis of government data. That number has doubled over the course of a recent graduate’s lifetime. Even adjusting for inflation, the average debt burden was half that size 20 years ago. According to the Federal Reserve, total outstanding student-loan debt stood at $986 billion at the end of the first quarter of this year, representing an increase of 2.1% from the previous quarter and nearly 50% from the same quarter in 2009.

The Atlantic, “Poor People Are Now More Likely to Live in Suburbs Than Cities," May 20, 2013
This week the Brookings Institution released a new study of population and income trends that finds the US suburbs are showing a rapid increase in poverty rates. According to the research, those living in poverty in the suburban areas grew 64 percent between 2000 and 2010, while many major cities exhibited a decrease in poverty levels. More densely populated cities still have high poverty rates but the total number of poor living in suburban area exceeds that in urban area, representing a reversal in nearly a century's worth of population trends.

IFAD and The World Bank, Sending Money Home to Asia, May 20, 2013
According to a new report, Asian migrants sent approximately US$260 billion to their families in 2012. However, many of the benefits of these cash flows did reach those in rural areas due to high transaction fees and limited financial service availability. High fees (on average 8.35%) also limit the amount of funds going to reduce poverty and providing for recipient families. The report examines how to improve the market for remittances to Asia. Asia represents one of the largest remittance markets in the world, affecting over 70 million families. In Afghanistan, Bangladesh, the Philippines, and Nepal, remittances account for 10% of GDP; in Tajikistan, they may total more than 50% of GDP.

In case you missed it…

These items were recently released in the past few months but are relevant to conversations we’re having at FAI.

Gabriel Davel, Regulatory Options to Curb Debt Stress, CGAP, March 15, 2013
This Focus Note argues that it is preferable to implement appropriate monitoring mechanisms and regulatory interventions at an early stage in credit market development, to detect potential debt stress and prevent reckless lending practices, thereby avoiding risks to financial markets, consumers, and the regulator’s credibility. Davel divides crises of reckless lending and over-indebtedness into five stages: a) preconditions; b) commercialization and expansion; c) debt build-up with low default; d) default and contraction; and e) institutional failure and potential contagion. The first three phases are the run-up to the crisis, while in the last two, the crisis has hit. Davel argues that it is the responsibility of regulators and lenders to recognize the signs while the market is still in one of the first three phases. 

The World Bank, The Global Findex Database: Financial Inclusion in Europe and Central Asia, April 2013
In Europe and Central Asia 45 percent of adults have an account with a formal financial institution though just 7 percent report having saved formally in the past year, according to new data from the Global Financial Inclusion (Global Findex) database. This note describes how individuals' use of financial services differs significantly by gender, education, employment status, and other individual characteristics. The note also provides insight into how adults in the region save, borrow, make payments, and manage risk.

 

Week of May 20, 2013

Week of May 6, 2013