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GFDR Seminars 2014

GFDR 2014 Seminars

The following seminars have taken place during the second season of Global Financial Development Report seminar series. The objective of the seminar series is to present preliminary findings from the studies underlying the report. The papers presented in the second season feed into the second GFDR, focusing on financial inclusion.

Informal Firms and Financial Inclusion: Cross-country and Experimental Evidence

Date: Wednesday, June 26, 2013

Time: 1:00 pm–2:30 pm

Venue: MC 7-100

Presenters: Subika Farazi (Core Team Member, 2014 Global Financial Development Report, World Bank); Francisco Campos (Economist, FPD Africa Region, World Bank)

Discussant: Wendy Teleki (Principal Operations Officer, Global Industry, Financial Markets, IFC)

Chair: Martin Cihak (World Bank, Lead Economist)

Abstract: Many firms in the developing world—including a majority of micro, small and medium enterprises—operate in the informal economy. The informal firms face a variety of constraints, making it harder for them to do business and grow. Lack of access to finance is often cited as the biggest operational constraint these firms face. Understanding the relationship between formality and financial inclusion is critical for designing effective policies. Using cross-country data, Subika Farazi will analyze statistics on the use of finance by informal firms, identify characteristics of informal firms that are associated with higher use of finance, and compare the use of finance by firms in the formal and informal sector. Francisco Campos will complement this by presenting preliminary findings from an ongoing study on the importance of formalization for financial inclusion in Malawi.

Subika Farazi is a member of the core team working on the 2014 Global Financial Development Report. Prior to joining the team, she worked with the Middle East and North Africa FPD, co-authoring a report on finance in the region.

Francisco Campos is an Economist in the Africa FPD. His research interests include entrepreneurship, skills development, informality, financial inclusion, and gender. He has worked for the Gender Innovation Lab in the Africa region and has extensive experience in private and public sectors including on SME development, finance, and investment promotion.

Wendy Teleki is a principal program officer in the IFC’s Global Financial Markets Department. She heads the Global SME Finance Facility investment component and is the focal point for IFC’s SME & Jobs Committee. She was the coordinator for the SME Capacity Building Facility and was responsible for launching IFC’s Advisory Service program in Indonesia.

Related Links: Presentation by Subika Farazi | Presentation by Francisco Campos

Islamic Finance and Financial Inclusion
Financial (Dis-)Information and Disclosure: New Experimental Evidence
Can You Teach Someone To Be Financially Capable? A Review Of The Empirical Evidence Using Meta-Analysis

Date: Wednesday, May 15, 2013

Time: 1:00 pm–2:30 pm

Venue: MC 5-100

Presenters: Bilal Zia (Economist, Development Research Group, World Bank); Margaret Miller (Senior Economist, GFDR Core Team, World Bank)

Discussant: Valeria Perotti (Private Sector Development Specialist, World Bank); and Florentina Mulaj (Social Protection Specialist, World Bank)

Chair: Asli Demirgüç-Kunt (World Bank, Director of Research)

Abstract: Bilal Zia and Margaret Miller will present new research findings from a review of more than 100 papers and articles that offer empirical evidence regarding the effectiveness of financial literacy and capability interventions. A unique contribution of their work is the use of meta-analysis to provide a more systematic analysis of this body of research. There is an abundant literature linking financial literacy / financial knowledge with financial outcomes including savings for retirement or for general purposes, wealth accumulation and improved credit performance. However, the evidence appears to be more mixed on whether interventions can be designed to effectively increase financial knowledge and influence financial behaviors so that outcomes are improved. The use of meta-analysis helps to clarify the nature and results of this research to date, as well as the many gaps that continue to exist. Main findings relate to the use of financial education for improving savings outcomes.

Valeria Perotti and Florentina Mulaj, both of whom are members of the core team for the Russia Trust Fund for Financial Literacy and Education, will discuss.

Related Links: Presentation

Bank Competition and Firm Access to Finance

Date: Thursday, May 9, 2013

Time: 1:00 pm–2:30 pm

Venue: MC 10-100

Presenters: Maria Soledad Martinez Peria (Lead Economist, World Bank); Claudia Ruiz (Young Professional, World Bank); Bernardo Morais (Economist, Federal Reserve Board)

Discussant: Martin Melecky (Senior Financial Sector Specialist, World Bank)

Chair: Asli Demirgüç-Kunt (World Bank, Director of Research)

Abstract: Ms. Martinez Peria will present her study on bank competition and firm access to finance, co-authored with Inessa Love. Combining multi-year, firm-level surveys with country-level panel data for 53 countries, the study finds that high market power in the banking sector diminishes firms’ access to finance, but banking sector concentration is not a robust predictor of firms’ access to finance. Also, greater financial development and better credit information can mitigate the damaging impact of market power, while high government ownership of banks exacerbates the negative effect. Ms. Ruiz and Mr. Morais will then present a paper focusing on Mexico, which suggests that collusion among banks can partly explain the relatively high cost of bank loans to small and medium-sized enterprises in the country. The paper presents a model in which banks segment customers by location, size, and banking affiliation. One of the main predictions, confirmed by the data, is that larger banks engage more in collusive practices. Interestingly, larger customers suffer more from collusion. Mr. Melecky will be the discussant.

Related Links: Presentation by Inessa Love and Sole Martínez Pería | Presentation by Claudia Ruiz Ortega | Working Paper 6163

Exits from the Debt Trap: Can Borrower Bailouts Improve Financial Inclusion?

Date: Wednesday, April 24, 2013

Time: 1:00 pm–2:30 pm

Venue: MC C2-135

Presenters: Xavier Gine (Senior Economist, Finance and Private Sector Research, World Bank); Martin Kanz (Economist, Finance and Private Sector Research, World Bank)

Discussant: Niraj Verma (Senior Financial Sector Specialist, South Asia Region, World Bank)

Chair: Asli Demirgüç-Kunt (World Bank, Director of Research)

Abstract: Many households around the world are excluded from basic financial services due to high levels of household debt. This is particularly true in rural economies, where households are exposed to recurring income shocks, but lack the financial tools to insure against such income volatility. Responding to the dual challenge of household indebtedness and financial exclusion, many countries have experimented with debt restructuring or relief programs for rural households. Such programs have been highly controversial: While bailout proponents argue that bailouts can cure debt overhang and increase household productivity, critics worry about adverse long term effects on moral hazard and access to finance.

The seminar will present preliminary results from two studies examining India’s Debt Relief Program for Small and Marginal Farmers –one of the largest household level debt relief programs in history. The first study uses district level data to examine the effect of the bailout on subsequent credit supply and moral hazard. The second study uses micro-data from a household survey to trace the effect of the bailout on the productivity and investment decisions of affected households. The seminar will discuss to what extent debt restructuring and debt relief at the household level can serve to restore financial access, and which program features can be useful to limit problems of moral hazard that may arise from bailouts with weak conditionality.

Related Links: Presentation | Discussant Presentation | Paper

Financing and Growth of Firms in China and India: A Tale of Two Capital Markets

Date: Thursday, April 11, 2013

Time: 1:00 pm–2:30 pm

Venue: MC 8-100

Presenters: Tatiana Didier (Senior Economist, Latin America and Caribbean, World Bank); Sergio Schmukler (Lead Economist, Development Research Group, World Bank)

Discussants: Cheng Hoon Lim (Division Chief, International Monetary Fund);Timothy Brennan (Principal Securities Market Specialist, World Bank/IFC)

Chair: Asli Demirgüç-Kunt (World Bank, Director of Research)

Abstract: Tatiana Didier and Sergio Schmukler will present their FPD Academy award-winning paper, studying the extent to which firms in China and India use capital markets to obtain financing and grow. Using a unique data set on domestic and international capital raising activity and performance, they find that the expansion of financial market activity since the 1990s has been much more limited than aggregate figures suggest. Relatively few firms raise capital and even fewer capture the bulk the financing. Moreover, firms that issue equity or bonds are different and behave differently from other publicly listed firms. Among other things, they tend to be larger and grow faster. The differences between users and nonusers exist before capital is raised, are associated with the probability of raising capital, and become more accentuated afterwards. The distribution of issuing firms shifts more over time than the distribution of those that do not issue, suggesting little convergence in firm size among listed firms. Cheng Hoon Lim and Timothy Brennan will be the discussants, putting these results into a broader perspective of capital market development in Asia.

Related Links: Presentation | Working Paper 6401

Banking the Unbankable Can Be Profitable

Date: Thursday, April 4, 2013

Time: 1:00 pm–2:30 pm

Venue: MC 10-100

Presenter: Robert J. Cull (Lead Economist, DECFP)

Discussant: Gunhild Berg (Financial Sector Specialist, AFTFE)

Chair: Asli Demirgüç-Kunt (World Bank, Director of Research)

Abstract: The seminar will examine the case of Equity Bank, a private commercial bank in Kenya, focusing on microfinance. Unlike other commercial banks in the country, Equity Bank pursues distinct branching strategies that target underserved areas and less privileged households. Mr. Cull will present results based on a recent study, co-authored with F. Allen, E. Carletti, J. Quian, L. Senbet, and P. Valenzuela. Based on household surveys and bank penetration data at the district level in 2006 and 2009, the study suggests that Equity Bank's presence has a positive and significant impact on households’ use of bank accounts and bank credit, especially for people with low income, no salaried job and less education, and those that do not own their own home. The seminar will discuss to what extent Equity Bank’s business model—providing financial services to population segments typically ignored by traditional commercial banks and generating sustainable profits in the process—can help in developing more inclusive financial sectors in other countries.

Related Links: Presentation | Comment | Paper: Improving Access to Banking: Evidence from Kenya

Women Entrepreneurs and Microfinance

Date: Thursday, March 15, 2013

Time: 1:00 pm–2:30 pm

Venue: MC 8-100

Presenter: Mehnaz Safavian (Senior Economist, FPD/South Asia)

Discussant: Mary Hallward-Driemeier (Lead Economist, DEC)

Chair: Asli Demirgüç-Kunt (World Bank, Director of Research)

Abstract: Fostering entrepreneurship among women is a crucial part of a robust economic growth and inclusion agenda. Access to financial services is an important component of starting and growing a business, but can be particularly challenging for women entrepreneurs. The seminar will discuss products, services, policies, and other elements of microfinance's business model that affect demand for and access to microfinance by women borrowers, and in particular women entrepreneurs. Ms. Safavian will present findings of a recent major study on the subject, focusing on Pakistan. Ms. Hallward-Driemeier will be the discussant, bringing in a cross-country perspective.

Related Links: Paper | Presentation | Discussant's Presentation

Managerial Capital, Financial Literacy, and Access to Finance
Real Impact of Improved Access to Finance
Financial Literacy Through Mass Entertainment Media
​Collateral Registries for Movable Assets: Does Their Introduction Spur Firms’ Access to Finance?
The Foundations of Financial Inclusion

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