nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2017‒09‒17
four papers chosen by

  1. Determinants of Financial Inclusion in Africa: A Dynamic Panel Data Approach By Evans, Olaniyi
  2. Household debt burden and financial vulnerability in Luxembourg By Gaston Giordana; Michael Ziegelmeyer
  3. Socially Disadvantaged Groups and Microfinance in India By Jean-Marie Baland; Rohini Somanathan; Lore Vandewalle
  4. Advancing the Interests of Bangladesh’s Migrant Workers: Issues of Financial Inclusion and Social Protection By Mustafizur Rahman; Md. Zafar Sadique; Estiaque Bari

  1. By: Evans, Olaniyi
    Abstract: This study documents the determinants of financial inclusion in Africa for the period 2005 to 2014, using the dynamic panel data approach. The study finds that per capita income, broad money (% of GDP), literacy, internet access and Islamic banking presence and activity are significant factors explaining the level of financial inclusion in Africa. Domestic credit provided by financial sector (% of GDP), deposit interest rates, inflation and population have insignificant impacts on financial inclusion. The findings of this study are of utmost value to African central banks, policymakers and commercial bankers as they advance innovative approaches to enhance the involvement of excluded poor people in formal finance in Africa.
    Keywords: Financial inclusion, finance, dynamic panel data, Africa
    JEL: G2 O1 O16 O17
    Date: 2016
  2. By: Gaston Giordana; Michael Ziegelmeyer
    Abstract: We construct debt burden indicators at the level of individual households and calculate the share of households that are financially vulnerable using Luxembourg survey data collected in 2010 and 2014. The share of households that were indebted declined from 58.3% in 2010 to 54.6% in 2014, but the median level of debt (among indebted households) increased by 22% to reach € 89,800. This suggests that indebted households in 2014 carried a heavier burden than indebted households in 2010. However, among several debt burden indicators considered, only the debt-to-income ratio and the loan-to-value ratio of the outstanding stock registered a statistically significant increase. The median debt service-to-income ratio actually declined, mainly reflecting lower costs on non-mortgage debt. Using conventional thresholds to identify financially vulnerable households, we find that their share in the population of indebted households increased, although the change was only statistically significant when measured by the debt-to-income ratio. The different indicators of debt burden and financial vulnerability are highly correlated with several socio-economic characteristics, including age, gross income and net wealth. In particular, low income households have lower leverage and disadvantaged socio-economic groups (in terms of education, employment status and homeownership status) tend to be less financially vulnerable. However, after controlling for other factors, low income or low wealth increase the probability of being identified as vulnerable.
    Keywords: Household debt; Household financial vulnerability; Financial stability; HFCS; Household finance
    JEL: D10 D14 G21
    Date: 2017–09
  3. By: Jean-Marie Baland (CRED, University of Namur); Rohini Somanathan (Department of Economics, Delhi School of Economics); Lore Vandewalle (The Graduate Institute, Geneva)
    Abstract: About two-thirds of microfinance clients in India are reported to be in Self-Help Groups (SHGs). These mostly women’s groups have been promoted by nationalized banks since the early nineties to improve credit access among especially disadvantaged populations. We study the survival of members and groups and their differential access to credit using a census of SHGs created between 1998 and 2006 in 386 villages in eastern India. Households without land and those from disadvantaged castes and tribes exhibit higher attrition rates and smaller loans but we find the main predictor of differential outcomes is education rather than social identity. Members with formal education receive larger loans and have a 30 per cent lower risk of being separated from their group. Groups with no such members are also four times more likely to become inactive.
    Date: 2017–07
  4. By: Mustafizur Rahman; Md. Zafar Sadique; Estiaque Bari
    Abstract: Migration, and the consequent remittance flows, have wide-ranging implications for Bangladesh, particularly in terms of employment generation, foreign exchange reserves and balance of payments, household expenditure, savings and investment, and in general, for the overall development of the country’s economy. However, issues of financial inclusion and social protection of Bangladesh’s migrant workers have continued to remain relatively unaddressed over the past years. This paper examines cross-country experiences covering three areas: (a) reduction of cost of sending remittances; (b) deployment of financial instruments to harness savings of migrant workers; and (c) social protection schemes to secure and safeguard the interests of migrant workers. The paper undertakes a review of the regulatory mechanisms, measures and schemes in place in Bangladesh in the aforesaid three areas; and by drawing on global best practices and experiences, comes up with a number of recommendations to address the relevant challenges. The paper recommends how modern technology could help reduce transaction costs and innovative financial instruments could be deployed to harness savings of migrant workers. The paper also proposes a number of measures towards better social protection of migrant workers in both host countries and in Bangladesh.
    Keywords: Bangladesh, Migrant workers, Social protection, Financial Inclusion
    Date: 2016–04

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