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Global Financial Development Report 2014: Financial Inclusion And Financial Exclusion

1157 words - 5 pages

In the first chapter of the report (Global Financial Development Report 2014) the main focus is on Financial Inclusion and Financial Exclusion. The chapter is describing that financial systems provide different type of financial services to the individuals and firms. The basic purpose of the report is that what the main role of financial inclusion on economic development. If there is an absence of financial inclusion in the economy it causes poverty and slow economic growth. So we find in this chapter why financial exclusion exists in the economy that causes continuous income inequality and slow growth.
Financial Inclusion:
It means the number of individual, groups and firms use financial ...view middle of the document...

The subprime crisis shows that the low screening and monitoring standards affect the consumer and financial stability. So financial inclusion can be increase through by increasing supply by removing market inefficiency such as reducing the problem of asymmetric information. The non-price barrier also affects the potential customers to use financial services. There are number of individuals who do not have access in their areas are excluded and some others because of poor regulations and a long documentation requirements. The policy makers said this not an access issue, but issue create because of underdeveloped institutional infrastructure, so government should play a vital role to reduce this kind of exclusions.
This report tells us that usage of financial services is different between developed and developing countries. Through a survey it observed that the number of adults in developed countries with an account at formal institution is double from the developing countries adults. They measure these data by interview more than 150000 representative of country and selected adults, that how the adults belong to 148 economy mange their daily financial transactions. Mostly people are less aware to the formal financial services because of their less knowledge which is the main reason of their exclusion. They also include the firms of all sizes on which they survey formally and informally. The survey on the firm’s access to the security markets of cross-country.
Accounts are the very important measure of financial inclusion because mostly all formal financial activities are related to accounts. In developed economies this rate is greater as compare to low-income economies. Half of the total adult population in globally has a formal account. In spite of the of the increased importance of the noncash payments methods cash methods are still a head of them in terms of importance. As only a small number of people are utilize noncash methods.
In terms of savings there is variety in savings’ trends across the world. Studies showed that it is higher in high income economies and lower in low income economies. But only the lower portion of these savings is saved in the financial institutions and many people prefer other sources of savings like savings clubs instead of banks, credit unions or macro finance institutions. Such methods are more popular in low economies. When we see in account penetration then the trend of formal financial savings also varies...

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