Papers in this volume were prepared for the IFC Sasana Workshop held in Sasana Kijang, Kuala Lumpur, 5-6 November 2012.
On 5–6 November 2012, the Central Bank of Malaysia and the Irving Fisher Committee on Central Bank Statistics (IFC) co-sponsored an international meeting at Sasana Kijang, Kuala Lumpur, to discuss measurement and indicators for financial inclusion. Chaired by Deputy Governor Muhammad bin Ibrahim, who was also the Chairman of the IFC, the meeting was attended by 61 participants from 35 central banks, statistical offices, international organisations, NGOs and academic institutions from Africa, Asia, Europe and North America.
The sessions covered the following aspects related to financial inclusion indicators:
- international initiatives to promote the measurement of financial inclusion;
- national practices for collecting data on financial development;
- measuring access to and usage of financial services;
- alternative measures of financial inclusion, including SMEs’ access to finance;
- indicators of financial literacy, consumer protection and community development; and
- the development of composite financial inclusion indicators.
The Workshop provided a welcome opportunity to promote national and international best practices to strengthen financial inclusion measurement and data. A key outcome of the meeting was the formal adoption of a Sasana Statement on Financial Inclusion Indicators.
As emphasised by the IFC Chairman, this financial inclusion initiative has been strongly supported by the UN Secretary General’s Special Advocate for Inclusive Finance for Development, her Royal Highness Princess Maxima of the Netherlands, who had made the following statement: “Financial inclusion is essential for employment, equitable economic growth and development, and financial stability. To achieve these goals, policymakers need good national data. Appropriate financial inclusion indicators will be so valuable to produce more and comparable data on which products, delivery models, and policies have the greatest impact on poor people and national priorities.”
The Workshop highlighted the following main points:
- Financial inclusion is a fundamental issue for governments and policymakers around the world. It is estimated that, at the beginning of the 2000s, half of the world’s adult population had no account at a formal financial institution, and three quarters of poor people were unbanked.
- Financial inclusion is a key policy area and the central bank community has a particular interest in it. As emphasised in the IFC Chairman’s Opening Remarks, greater financial inclusion is essential for sustained economic welfare and for reducing poverty. It also supports economic, monetary and financial stability, by making saving and investment decisions more efficient, enhancing the effectiveness of monetary policy instruments, and facilitating the functioning of the economy. This was echoed by the presentation from the Bank of Mozambique, which emphasised that the scope of the financial sector plays an important role in facilitating private sector growth in developing economies.
- In turn, economic stability helps to develop and strengthen a smoothly functioning financial system that can support financial inclusion. In his keynote address, K C Chakrabarty, Deputy Governor of the Reserve Bank of India, drew on the various initiatives implemented in India in measuring financial inclusion to highlight the “trinity” – financial inclusion, financial literacy and consumer protection – that can make financial stability possible.
- Data on financial inclusion raise important issues. Well founded data frameworks are essential when developing financial services for the poor, in both formal and informal markets. Adequate indicators are a precondition for good financial inclusion policies, as emphasised in the presentation by the Alliance for Financial Inclusion (AFI).3 They ensure that financial inclusion is properly assessed and that policies aimed at developing it are adequately implemented, monitored, and adjusted as required. Good statistics can also help to strike a fine balance between encouraging innovation and the growth of financial services on the one hand, and ensuring that financial stability is preserved on the other.
- The IFC can be instrumental in facilitating central banks’ discussions on data issues related to financial inclusion. Operating under the auspices of the Bank for International Settlements, it is a forum of economists and statisticians from 82 central banks and monetary authorities or agencies from all regions.
This paper presents a summary of the Workshop discussions, organised around five main themes.
- First, it provides a brief overview of existing financial inclusion data collection frameworks.
- Second, it discusses how the collection, compilation, presentation and publication of financial inclusion data could be enhanced.
- Third, it reviews potential ways to fill existing data gaps, including by using surveys, developing methodologies for qualitative indicators and measuring how new technologies are facilitating financial inclusion.
- Fourth, it assesses the merits of developing composite financial inclusion indices to enhance comparability across regions and over time.
- Fifth, it underlines the importance of developing a clear analytical framework for assessing the implementation of financial inclusion policies and standards.