Measuring Financial Inclusion Core Set Of Financial .
Financial Inclusion DataWorking Group (FIDWG)Measuring Financial InclusionCore Set of Financial Inclusion IndicatorsThe Core Set of Financial Inclusion Indicatorswas developed by AFI’s Financial Inclusion DataWorking Group (FIDWG) as a measurement toolto provide a method for capturing the status offinancial inclusion within countries.Guideline Note No.4March 2013
ContentsContext3Purpose and critical issues3Key principles of the Core Set3Key dimensions of the Core Set: access and usage4Access dimensionMeasurementPractical issues4Usage dimensionMeasurement5Using the Core Set of Indicators5Appendix6Formulas for calculating the Core Set of Financial Inclusion IndicatorsThe AFI Financial Inclusion Data Working Group (FIDWG) was createdto explore the area of financial inclusion data, to share expertise indata collection and measurement and to build capacity across the AFInetwork. FIDWG members are data practitioners and policymakers fromcountries where data initiatives are in various stages of development.Since it launched in 2009, FIDWG has been leveraging growing interestin this area to capture the latest progress and lessons from data expertsand practitioners around the world, and to create new knowledgeresources for policymakers in the AFI network and beyond. 2013 (March), Alliance for Financial InclusionAll rights reserved.
ContextMore and more, policymakers are recognizingthe importance of evidence-based policymakingand the critical role of data in the policymakingprocess, from design and implementation tomonitoring and evaluation. With rigorous, objectiveand reliable data, policymakers can accuratelydiagnose the state of financial inclusion, setjudicious targets, identify barriers, craft effectivepolicies and monitor and assess the impacts ofthese policies.While policymakers agree that it is important tocollect data on financial inclusion, no standardcurrently exists for what to measure or how tomeasure it. Countries often use different indicatorsand a variety of methodologies to measurethe same data, and some have sophisticateddata collection mechanisms while others havenone at all. To address the need for consistentfinancial inclusion data across countries, the AFIFinancial Inclusion Data Working Group (FIDWG)has formulated a Core Set of Financial InclusionIndicators.Purpose and critical issuesThe Core Set of Financial Inclusion Indicators(“the Core Set”) is a limited set of quantitativeindicators that capture the state of financialinclusion in a country. The Core Set is the firststep for policymakers seeking to expand financialinclusion — the indicators measure the most basicand important aspects of financial inclusion and areintended to help policymakers develop appropriatefinancial inclusion policies and monitor progressover time.As a standardized tool for collecting and measuringquantitative data, the Core Set helps to createconsistency and comparability across countries.Policymakers can use the Core Set as a benchmarkagainst their peers, although the primary purpose isnot to generate rankings or set standards.While FIDWG made an effort to align the Core Setwith existing international measurement initiatives(such as the IMF Financial Access Survey, World BankFinancial Inclusion Index and the G20 Basic Set ofFinancial Inclusion Indicators1), what makes theCore Set of Financial Inclusion Indicators unique is1that it was designed primarily as a country-specificfinancial inclusion measurement tool. The CoreSet has the built-in flexibility, for example, todefine “administrative unit” or “adult population”in accordance with national definitions, makingcomparability across countries imperfect, but at thesame time helping to instill a sense of ownershipamong the countries that use it.Key principles of the Core SetThe Core Set of Indicators is based on sixkey principles: Usefulness and relevance. The primaryconsideration for selecting the Core Set is theusefulness and relevance of the indicators fordomestic policymaking. Pragmatism. Data collection should beachievable within a reasonable time frame. TheCore Set was designed to leverage existing andreadily available data in order to minimize costand effort. Consistency. Given the lack of a uniform,internationally accepted definition offinancial inclusion, the Core Set offersstandard definitions to ensure consistency inmeasurement and comparability across time andcountries. To avoid overburdening countries, theCore Set is aligned, to the extent possible, withthe financial access surveys and data collectionprojects of international and multilateralorganizations. Flexibility. The Core Set recognizes that acountry’s data initiatives are driven largelyby its rationale for pursuing greater financialinclusion, and that they are shaped by thecountry’s unique economic, geographic, socialand cultural context. Given that circumstancesand resources vary greatly across countries, theCore Set gives countries the flexibility to adaptcertain definitions and/or use proxy indicators.Transparency is critical, and countriesare encouraged to uphold the principle ofconsistency by disclosing any variations. Balance. The Core Set is a balanced data setthat addresses two important dimensions offinancial inclusion — access and usage — andleverages both supply- and demand-side data.The Core Set was used by the GPFI to support its development of the G20 Basic Set of Financial Inclusion Indicators. The two are closelyaligned and complementary.Measuring Financial Inclusion I The Core Set of Financial Inclusion Indicators I 3
Aspiration. The Core Set strives to define a setof indicators that accurately reflect financialinclusion. To meet this objective, additionaleffort and resources may be required tomeasure some of the indicators. Countriesshould aspire to collect the Core Set as it isdefined, but in the spirit of flexibility andpragmatism, certain modifications are acceptedand proxy indicators are provided when this isnot possible. Finally, the aspiration principleimplies that the Core Set is dynamic and betterindicators may be introduced at a later date.Key dimensions of the Core Set:access and usageThe Core Set of Financial Inclusion Indicatorsaddresses the two basic dimensions of financialinclusion: access and usage of financial services.2The quality dimension, while important, is a morecomplex topic both conceptually and in terms ofmeasurement, typically requiring demand-sidesurveys and the use of qualitative indicators.FIDWG will address this dimension under a broadermeasurement framework for financial inclusion inthe near future.Access dimension“Access” refers to the ability to use the servicesand products offered by formal financialinstitutions. Determining levels of access mayrequire identifying and analyzing potential barriersto opening and using a bank account, such ascost or physical proximity of bank service points(branches, ATMs, etc.). Data on access can usuallybe obtained through information provided byfinancial institutions.The indicators for access in the Core Set are:1.1 Number of access points per 10,000 adultsat a national level segmented by type andadministrative unit1.2 Percentage of administrative units with atleast one access point1.3 Percentage of total population living inadministrative units with at least oneaccess pointMeasurementData on access should be collected from thesupply side, i.e. financial institutions. Indicator 1.3incorporates detailed population data that shouldbe available through national statistics.2Some definitionsWhat is an “access point”?An access point is any physical entity wherean individual can perform cash-in and cashout transactions with a regulated financialinstitution, such as bank branches, any type ofbanking office, and ATMs, agents and POS devicesthat perform cash-in and cash-out transactions.Note: Mobile phones and PCs are not consideredaccess points because they cannot performphysical cash-in and cash-out transactions.What is an “administrative unit”?A country typically divides its jurisdictions into“administrative units” based on geographical,political, cultural or other considerations. Forexample:Tier 1: NationTier 2: Region, stateTier 3: County, town, provinceTier 4: Municipality, districtTier 5: Barangay, villageSince countries define their administrativeunits differently, country-specific definitionsare acceptable.How are “adults” defined in the Core Set?An adult is anyone aged 15 years or older. Acountry may use its own (e.g. legally prescribed)definition of an adult, but should disclose this inthe Core Set of Financial Indicators Worksheet.Practical issuesWhat level of administrative unit should bereported in the Core Set?At minimum, a country should report its coreindicators at the third tier administrative unit sinceTier 1 (national) and Tier 2 (regional) indicatorsgenerally do not provide a precise picture offinancial access. Financial access is typically abigger challenge in lower tier administrative units,such as a county (Tier 3) or municipality (Tier 4),where residents may have limited access points ornone at all. A country can report its core indicatorsbeyond these levels (Tier 5) as long as the tier isclearly indicated.This focus was agreed upon by the FIDWG at its September 2010 and March 2011 meetings.4 I Measuring Financial Inclusion I The Core Set of Financial Inclusion Indicators
Why is the level of activity of deposit andcredit accounts not considered in the CoreSet of Financial Inclusion Indicators?The level of activity of deposit and creditaccounts would provide a good indicator of usage,but “active” accounts are defined differentlyacross countries and even across different types offinancial service providers.What is an “agent” and is it considered anaccess point?An agent is a third party entity authorized, accredited,or contracted to perform cash-in and cash-outtransactions on behalf of a regulated financialinstitution (for example, a convenience store providingfinancial services on behalf of a bank).Agents that perform both cash-in and cash-outtransactions can be counted as access points.Agents that are not linked to a regulated financialinstitution, but are specifically authorized toperform cash-in and cash-out transactions (e.g.non-bank remittance agents), may also be countedas access points.Should all types of financial service providers,both regulated and unregulated, be counted inthe Core Set?As a baseline, count financial service providersthat are authorized/licensed (Level 2) and activelysupervised (Level 3). Registered financial serviceproviders (Level 1) can also be counted as long asthe information on these providers is reliable andreported regularly.Why do I only count the access points ofregulated financial institutions and not informalproviders of financial services?Because the Core Set is guided by the principlesof pragmatism and consistency, and since datafrom unregulated and informal entities can belimited, cannot be traced, or may not exist at all,FIDWG chose to include only the access points ofregulated financial institutions in the Core Set.Also, in general, a regulator has no legal basisor mandate to collect information from entitiesoutside its jurisdiction.Usage dimension“Usage” refers to the depth or extent of financialservices and product use. Determining usagerequires gathering details about the regularity,frequency and duration of use over time.The indicators for usage in the Core Set are:2.1 Percentage of adults with at least one type ofregulated deposit account2.2 Percentage of adults with at least one type ofregulated credit accountIn countries where data are not available, thefollowing proxy indicators can be used:2.1x Number of regulated deposit accounts per10,000 adults2.2x Number of regulated credit accounts per10,000 adultsMeasurementThe data for Core Indicators 2.1 and 2.2would likely be collected through nationallyrepresentative demand-side surveys. (The datacould also be collected through the supply sidein countries where supply-side data is linked toa robust national identity system.) The proxyindicators 2.1x and 2.2x would be obtained throughsupply-side data.Using the Core Set of IndicatorsSeveral AFI members already collect data based onthe Core Set of Indicators and AFI encourages all itsmembers to do so.For countries that have little or no data with whichto calculate the Core Set, the indicators in theCore Set should be sufficient to obtain a baselinesnapshot of financial inclusion. These countries mayaspire to collect the Core Set as a starting point formeasuring financial inclusion.For countries that are more advanced in datacollection and measurement and already haveindicators for financial inclusion, the Core Set willnot be enough. These countries are encouragedto go beyond the Core Set and collect additionalindicators that are relevant to their national contextand unique policy concerns. For example, countriesmight collect data on access points or types offinancial services, such as remittances, payments orinsurance. Countries can also determine the level ofdisaggregation, breadth and depth of measurement,depending on their needs and priorities.Measuring Financial Inclusion I The Core Set of Financial Inclusion Indicators I 5
AppendixFormulas for calculating the Core Set of Financial Inclusion IndicatorsHow do I calculate Core Indicator 1.1?(Number of access points per 10,000 adults and per administrative unit)Formula for national level indicators:(Total number of access pointsTotal adult population)x 10,000Data requirements: Number of various types of access points Number of adults in the populationFormula per administrative unit:(Total number of access points in each administrative unitTotal adult population in each administrative unit)x 10,000Data requirements: Number of access points by type and by administrative unit Number of adults by administrative unitHow do I calculate Core Indicator 1.2?(Percentage of administrative units with at least 1 access point)Formula:Total number of administrative units with at least 1 access pointTotal number of administrative unitsData requirements: Number of access points by type and by administrative unitHow do I calculate Core Indicator 1.3?(Percentage of total population living in administrative units with at least 1 access point)Formula:Total number of adults in all administrative units with at least 1 access pointTotal adult populationData requirements: Number of adults by administrative unit Total number of adults in the population6 I Measuring Financial Inclusion I The Core Set of Financial Inclusion Indicators
Formulas for calculating the Core Set of Financial Inclusion Indicators (continued)How do I calculate Core Indicator 2.1?(Percentage of adults with at least 1 type of regulated deposit account)Formula:Total number of adults with at least 1 regulated deposit accountTotal adult populationData requirements: Number of adults with at least 1 regulated deposit account (usually generated from demand-side surveys) Total number of adults in the populationHow do I calculate Core Indicator 2.1x (Number of regulated deposit accounts per 10,000 adults), whichis a proxy for Core Indicator 2.1? (Percentage of adults with at least 1 type of regulated deposit account)Formula:(Total number of regulated deposit accountsTotal adult population)x 10,000Data requirements: Number of regulated deposit accounts (supply-side data) Total number of adults in the populationHow do I calculate Core Indicator 2.2?(Percentage of adults with at least 1 type of regulated credit account)Formula:Total number of adults with at least 1 regulated credit accountTotal adult populationData requirements: Number of adults that have at least 1 regulated credit account (usually generated from demand-sidesurveys) Total number of adults in the populationHow do I calculate Core Indicator 2.2x (Number of regulated credit accounts per 10,000 adults), which isa proxy for Core Indicator 2.2? (Percentage of adults with at least 1 type of regulated credit account)Formula:(Total number of regulated credit accountsTotal adult population)x 10,000Data requirements: Number of regulated credit accounts (supply-side data) Total number of adults in the populationMeasuring Financial Inclusion I The Core Set of Financial Inclusion Indicators I 7
About AFIThe Alliance for Financial Inclusion (AFI) is a global networkof financial inclusion policymaking bodies, including centralbanks, in developing countries. AFI provides its memberswith the tools and resources to share, develop andimplement their knowledge of financial inclusion policies.We connect policymakers through online and face-to-facechannels, supported by grants and links to strategicpartners, so that policymakers can share their insights andimplement the most appropriate financial inclusion policiesfor their countries’ individual circumstances.Learn more: www.afi-global.orgAlliance for Financial InclusionAFI, 399 Interchange Building, 24th floor, Sukhumvit Road, Klongtoey – Nua, Wattana, Bangkok 10110, Thailandt 66 (0)2 401 9370 f 66 (0)2 402 1122 e info@afi-global.org wsAFIAFI is funded by the Bill & Melinda Gates Foundation and administered by GIZ (German International Cooperation)
financial access. Financial access is typically a bigger challenge in lower tier administrative units, such as a county (Tier 3) or municipality (Tier 4), where residents may have limited access points or none at all. A country can report its core indicators beyond these levels (Tier 5) as long as the tier is clearly indicated.
Chapter 3 Financial Inclusion – Conceptual and Analytical Framework 3.1 Concept of financial inclusion 17 3.2 What is financial inclusion and/or financial exclusion? 18 3.3 The role of rural banks in boosting financial inclusion and promoting access to credit facilities in unbanked locations within Ghana 20
4 full financial inclusion can only be achieved when the users of financial services "not only have access to a range of financial services but are able to use them regularly as well".7 Financial literacy has been recognized as a key driver for financial inclusion,8 and has been incorporated as an integral part of the financial inclusion policy agenda of many countries.
Financial Inclusion Forum4, the Financial subject—the ultimate goal of efforts aimed at increasing financial inclusion is not simply a rise in the share of households that rely on services provided by banks. Rather, the aim of expanding financial inclusion is to provide more households with access to safe and affordable financial services.
Financial inclusion denotes delivery of financial services at an affordable cost to the vast sections of the disadvantaged and low-income groups. The various financial services include credit, savings, insurance . extending financial inclusion. Role of RRBs RRBs, post-merger, represent a powerful instrument for financial inclusion. Their
Financial Inclusion in the Philippines Dashboard As of First Quarter 2020 Access Banks (head office, branches, and other offices) [8] In the Core Set of Financial Inclusion Indicators developed by the Alliance for Financial Inclusion (AFI), access points are defined as regulated entitie
About the Financial Inclusion Survey The Financial Inclusion Survey (FIS) is a nationally representative survey dedicated to collect financial inclusion data from users and non-users of financial products and services. The 2019 FIS is the third run of the biennial survey which began in 2015.i The survey is part of the commitment of the Bangko Sentral ng Pilipinas (BSP) to build a
Indonesia's Financial Inclusion Commitment in International Fora Indonesia plays an active role in financial inclusion discussions in international fora. As a member of G-20, Indonesia ensures that The nine G-20 Principles for Innovation Financial Inclusion are implemented at national level. Indonesia is also committed in OECD forum to
financial inclusion is multi-dimensional, both participation barriers and financial frictions will be identified. A micro-founded general equilibrium model will be developed in order to identify constraints to financial inclusion. The focus will be on three segments of financial inclusion: access, depth and intermediation efficiency.
