Innovative Policies for Microfinance
This presentation gives an overview of the history and current state of financial inclusion. It discusses financial inclusion policies, and analyzes impact of inclusion. It presents key learnings from cases across the world, examines tradeoffs between inclusion and stability, and provides direction for future research.
The presentation points out that about half of the worlds population is unbanked, of which 95% are in developing countries. Studies reveal that financial development reduces income inequality, alleviates poverty, and enhances economic growth. The presentation suggests that microfinance regulatory framework should be designed only when there is a critical mass of successful business, and recommends relaxing branching regulation for banks as an alternative.
Areas for future research include diagnosis to identify binding constraints, randomized controlled trials, updated information on financial inclusion, and risk-analysis of technology-based inclusion policies with respect to stability. The presentation concludes with the following recommendations for enhancing inclusion:
- Analyzing risks in transactions of the poor;
- Leveraging successful innovations in developing countries;
- Shifting from credit to savings;
- Linking social protection to financial inclusion;
- Focusing on consumer protection for the poor.