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Measuring Financial Inclusion: How will we know when we've succeeded? Peru demonstrates the power of financial inclusion indicators to measure and understand financial access. Tilman Ehrbeck, CEO of CGAP, recently gave an interview predicting "financial inclusion in our lifetimes." The Center for Financial Inclusion launched an initiative in 2009 called "Financial Inclusion 2020." The momentum is certainly building behind financial inclusion, but how will we know when we've succeeded? Financial inclusion data remains relatively scarce and fragmented, making it difficult to answer that question today. However, several initiatives are underway to improve the quality of data and define a common set of indicators to measure progress toward financial inclusion. The Global Partnership for Financial Inclusion (GPFI) recently released an overview of several data collection efforts, as well as the Alliance for Financial Inclusion’s (AFI) “Core Set” of financial inclusion indicators. The Core Set was developed by a group of policy makers as a common framework for measuring financial inclusion. Twelve countries are currently piloting the Core Set, including Peru. A recent paper highlights the experiences of the pilot taking place in Peru.
When the Peruvian government began looking more closely at financial inclusion, they discovered that existing data on financial access was incomplete. Without sufficient data, it was impossible to accurately measure the existing gap in financial access, much less measure progress toward financial inclusion. Recognizing this data gap, the Superintendency of Banking, Insurance Companies and AFPs (SBS) developed a set of thirteen indicators to measure and monitor their vision of financial inclusion. With better data, the SBS hoped that they (and others) could more effectively target activities. The indicators, adapted from the AFI Core Set, are organized in three categories: (1) access to financial services; (2) use of financial services; and (3) geographical inequalities. The SBS was particularly interested in the geographic distribution of financial access, so they dug deeper by comparing the distribution of loans, deposits, and branches to the population distribution in Peru. Looking at data from 2001-2010, the results thus far are promising:
From this basic analysis, SBS can see not only that the number of access points is increasing, but that the access points are geographically disbursed and there has been an increase in loans and deposits originating outside the capital city. The detailed analysis in the report shows that there is still progress to be made in the geographic distribution of financial services, but SBS now has a benchmark against which they can measure progress. The Peruvian experience demonstrates the power of defining financial inclusion indicators in a country-specific context. By using the AFI Core Set as a starting point and adapting based on the specific needs of Peru, SBS can use the data to compare levels of access to other countries, identify policy interventions, and measure progress toward financial inclusion in Peru. What do you think about the AFI Core Set and the Peruvian example? How is your country measuring financial inclusion?
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Posted: 29 Nov 2011 Related Links: Related Documents: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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