Publication: World Bank Lending for Financial Inclusion: Lessons from Reviews of Select Projects
Loading...
Published
2015
ISSN
Date
2015-04-27
Author(s)
Editor(s)
Abstract
The purpose of the paper is to present a more granular view of such projects through the in-depth focus on a limited number of case studies, with a view to understanding what factors in the design of such lending have helped achieve objectives of expanded access, and what forms of interventions may have been less successful. It examines the nature of Bank lending vehicles, the partnering borrower institutions, the country environments in which its loans were extended, as well as broader elements of good practice that make for loan success. It examines the beneficiaries targeted and results achieved. It aims to draws lessons that suggest what factors could lead to success or failure in Bank operations focused on financial access. The remainder of the paper is organized as follows: section two briefly describes the set of the Bank s projects selected for detailed review. Sections three to six contain the core findings of the review. Section 3 focuses on alternative forms of borrower institutions that have served as vehicles for Bank projects, particularly, public sector banks, apex bank structures that include the private sector, rural banks, nonbanks, non-governmental organizations (NGOs) and microfinance institutions, in terms of the degree to which the Bank has been able to successfully partner with such institutions to expand financial access. It also looks at alternative forms of Bank loan design, policy-based loans, investment loans and lines of credit, Learning and Innovation Loans (LILs), matching grants, technical assistance and combinations thereof, and reviews evidence on the role of loan structure (including partnerships with other donors/lenders) and project success. Section four considers the effect of the broader business environment, in terms of financial regulation. Section five reviews elements of good practice that have contributed to success in lending that could be applicable to loans with any objective, and examines their application in the present context. Section six tries to construct a bottom line, reviewing available evidence on outcomes and impact; especially in terms of the ultimate beneficiaries reached. Section seven, the final section, summarizes the main messages emerging from the review and concludes with observations about ways forward.
Link to Data Set
Citation
“Kumar, Anjali; Narain, Sushma; Rubbani, Swizen. 2015. World Bank Lending for Financial Inclusion: Lessons from Reviews of Select Projects. IEG working paper series;no. 2015/1. © World Bank. http://hdl.handle.net/10986/21796 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Rural Banking(World Bank, Washington, DC, 2010-05)This case study describes the history and business model of the Rural and Community Bank (RCB) network in Ghana, analyzes its performance, identifies key issues, and makes recommendations on the way forward. The study analyzes the service delivery and financial performance of the RCBs. Before the establishment of RCBs in the late 1970s and the subsequent expansion of other service providers into rural areas, access to institutional credit for farm and nonfarm activities was scarce. The main sources of credit were moneylenders and traders that charged very high interest rates. In many rural communities, secure, safe, and convenient savings and payment facilities hardly existed. The first RCB was established in a farming community in the central region of Ghana in 1976. Rural communities showed tremendous interested in the community ownership and management features of RCBs, and by 1984 the number of RCBs reached 106. The introduction of a check payment system for cocoa farmers also spurred the establishment of local banks in many communities. The financial performance of many RCBs started to decline, however, for several reasons, including a drought that affected the country in 1983, weak governing ability, conflicts within boards of directors, and ineffective management in many RCBs. By the end of 2008, 127 RCBs were in operation with a total 584 service outlets. RCBs are regulated by Ghana's central bank, the Bank of Ghana, and thereby form part of the country's regulated financial sector. RCBs are the largest providers of formal financial services in rural areas and represent about half of the total banking outlets in Ghana.Publication Providing Financial Services in Rural Areas : A Fresh Look at Financial Cooperatives(Washington, DC, 2007)This report demonstrates that financial cooperatives can be sustainable providers of financial services in rural areas and development assistance needs to consider supporting them as a means to enhance access to rural finance. It does not suggest that financial cooperatives are the only providers or the preferred channel in all circumstances. For financial cooperatives to function as sustainable institutions, governments need to provide an enabling environment, not exercise excessive control that restricts growth and consolidation, and not use them as channels to provide subsidized credit. Integration into networks has wide-ranging benefits for financial cooperatives, ranging from improved governance to the ability to provide a wide range of services.Publication Financial Sector Assessment Program : Malawi - Access to Financial Services(World Bank, Washington, DC, 2008-09)This technical note the Malawi 2007 Financial Sector Assessment Program (FSAP) reviews the current challenges of increasing access to financial services in Malawi. After a cursory assessment of the state of the financial sector in chapter one, it summarizes the key challenges of rural financial sector development (chapter two); then discusses the opportunities that branchless banking technology offers (chapter three), the options for strengthening the financial infrastructure (chapter four) and the role of government in increasing access (chapter five). It concludes with recommendations on how authorities may seek to realize these opportunities (chapter six).Publication Fiji Microfinance Policy Review(Washington, DC, 2003-10)The Review suggests the outlines of an architecture for microfinance in Fiji in which the National Centre for Small and Micro-Enterprise Development (NCSMED), as envisioned by the Government of Fiji, is the primary source of funding and technical assistance for microfinance institutions. But to assure a sound financial sector building approach to policy it is desirable that the Royal Bank of Fiji also have substantial input. The Review also discusses the capacity-building needs of the sector and proposes that in addition to the role of NCSMED as the domestic focal point for capacity-building, the World Bank could be an appropriate external international agency to support the National Centre in that role.Publication Niger - Rural Financial Services : Expanding Financial Access to the Rural Poor(Washington, DC, 2011-12-22)The main objective of this study is to identify the major impediments to access to financial services in rural areas, and provide practical recommendations to address the identified problems. The study aims to inform on rural finance policies and innovative instruments by examining both supply and demand sides including an identification of non-financial issues that restrict development of the rural financial sector. Addressing the lack of rural access to financial services in the Niger development process continues to figure prominently on the Government agenda without, however, a systematic action plan and strategy. Adopting ad hoc solutions (such as the creation of an agricultural development bank) without addressing the structural issues that limit access to financial services will, unfortunately, not yield any positive long lasting results.
Users also downloaded
Showing related downloaded files
Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.