WPS7255 Policy Research Working Paper 7255 Public Disclosure Authorized The Global Findex Database 2014 Measuring Financial Inclusion around the World Public Disclosure Authorized Asli Demirguc-Kunt Leora Klapper Dorothe Singer Peter Van Oudheusden Public Disclosure Authorized Public Disclosure Authorized Development Research Group Finance and Private Sector Development Team April 2015 Policy Research Working Paper 7255 Abstract The Global Financial Inclusion (Global Findex) database, expand access to financial services in Sub-Saharan Africa. launched by the World Bank in 2011, provides compa- Along with these gains, the data also show that big oppor- rable indicators showing how people around the world tunities remain to increase financial inclusion, especially save, borrow, make payments, and manage risk. The 2014 among women and poor people. Governments and the edition of the database reveals that 62 percent of adults private sector can play a pivotal role by shifting the pay- worldwide have an account at a bank or another type of ment of wages and government transfers from cash into financial institution or with a mobile money provider. accounts. There are also large opportunities to spur Between 2011 and 2014, 700 million adults became greater use of accounts, allowing those who already have account holders while the number of those without an one to benefit more fully from financial inclusion. In account—the unbanked—dropped by 20 percent to 2 developing economies 1.3 billion adults with an account billion. What drove this increase in account ownership? pay utility bills in cash, and more than half a billion A growth in account penetration of 13 percentage points pay school fees in cash. Digitizing payments like these in developing economies and innovations in technology— would enable account holders to make the payments in particularly mobile money, which is helping to rapidly a way that is easier, more affordable, and more secure. This paper is a product of the Finance and Private Sector Development Team, Development Research Group. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The authors may be contacted at [email protected]. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Produced by the Research Support Team The Global Findex Database 2014 Measuring Financial Inclusion around the World World Bank Policy Research Working Paper 7255 Asli Demirguc-Kunt, Leora Klapper, Dorothe Singer, and Peter Van Oudheusden THE GLOBAL FINDEX DATABASE The findings, interpretations, and conclusions expressed in this volume are en- tirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The reference citation for the data provided in this volume is as follows: Demirguc-Kunt, Asli, Leora Klapper, Dorothe Singer, and Peter Van Oudheusden. 2015. “The Global Findex Database 2014: Measuring Financial Inclusion around the World.” Policy Research Working Paper 7255, World Bank, Washington, DC. To download the complete Global Financial Inclusion (Global Findex) database and related reports, visit http://www.worldbank.org/globalfindex. Design and layout by G. Quinn Information Design, Cabin John, MD. For questions or comments about this volume, please contact: Leora Klapper The World Bank Group 1818 H Street, NW Washington, DC 20433 USA Email: [email protected] CONTENTS Acknowledgments v Abstract vi Overview 1 Accounts 10 Ownership of accounts 11 How does account ownership vary around the world? How has account ownership changed over time? How does account ownership vary by individual characteristics? How and how often financial institution accounts are accessed 17 How often do account holders make deposits or withdrawals? How do account holders in developing economies make withdrawals? How many people own and use debit cards? How many people own and use credit cards? How many people access financial institution accounts through a mobile phone? How do people make direct electronic payments from financial institution accounts? Payments 28 Payments from businesses or government to people 29 How do people receive wage payments? How do people receive government transfers? How do people receive payments for agricultural products? Payments from people to businesses or government 33 How do people pay utility bills? How do people pay school fees? Payments between people—domestic remittances 34 How do people send and receive domestic remittances? What is the most common digital payment channel for remittances? Account holders’ use of digital payments 37 Saving, credit, and financial resilience 43 Saving for the future 44 How do people save? How do account holders save? How has savings behavior changed over time? What are the main reasons for saving? Credit and its purposes 48 What are the sources of new loans? What is the role of credit cards? How has borrowing changed over time? What are the main purposes for borrowing? Saving or borrowing for business? 53 Financial resilience 54 THE GLOBAL FINDEX DATABASE iii Opportunities for expanding financial inclusion 58 Who the unbanked are 59 What are the self-reported barriers to account ownership? Is there voluntary financial exclusion? How account holders use their accounts 62 How does the intensity of account use vary across regions? How does the intensity of account use vary by individual characteristics? Opportunities for expanding financial inclusion among the unbanked 64 Moving cash payments into accounts Channeling domestic remittances through accounts Shifting semiformal savings into accounts Opportunities for increasing the use of accounts among the banked 67 Paying utility bills and school fees through accounts Sending or receiving domestic remittances through accounts Saving formally References 71 Methodology 73 Indicator table 83 Global Findex questionnaire 85 The 2014 Global Findex database provides more than 100 indicators on such topics as account ownership and use, payments, saving, credit, and financial resilience, including by gender, age group, and household income. The complete economy-level database is available at http://www.worldbank.org/globalfindex. Individual-level data for 2014 will be published in fall 2015. All regional and global averages presented in this publication are population weighted. THE GLOBAL FINDEX DATABASE Iv ACKNOWLEDGMENTS The 2014 Global Financial Inclusion (Global Findex) database was developed by the Finance and Private Sector Development Team of the Development Research Group, by a team led by Leora Klapper under the supervision of Asli Demirguc-Kunt and comprising Saniya Ansar, Rafael Alonso Arenas, Jake Hess, Dorothe Singer, and Peter Van Oudheusden, and assisted by Esther Landines. The work was carried out under the management of Kaushik Basu. The team is grateful to Douglas Randall for helping with the questionnaire design. It is also grateful for substantive comments provided at different stages of the project by Massimo Cirasino, Mario Guadamillas, Jake Kendall, Aart Kraay, Maria Soledad Martinez Peria, Douglas Pearce, Peer Stein, and Rodger Voorhies; World Bank colleagues in the Development Economics Vice Presidency and the Financial Markets Global Practice; and staff at the Bill & Melinda Gates Foundation, the Better Than Cash Alliance, the Consulta- tive Group to Assist the Poor, the GSM Association, and the Office of the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA). The team is grateful too for the excellent survey execution and related support provided by Gallup, Inc. under the direction of Jon Clifton. The team is especially grateful to the Bill & Melinda Gates Foundation for providing fi- nancial support making the collection and dissemination of the data possible. Gerry Quinn designed the report. Alison Strong provided editorial assistance. THE GLOBAL FINDEX DATABASE v ABSTRACT The Global Financial Inclusion (Global Findex) database, launched by the World Bank in 2011, provides comparable indicators showing how people around the world save, bor- row, make payments, and manage risk. The 2014 edition of the database reveals that 62 percent of adults worldwide have an account at a bank or another type of financial institution