Ideas to Action:

Independent research for global prosperity

Publications

 

December 20, 2016

The Impact of Anti-Money Laundering Regulation on Payment Flows: Evidence from SWIFT Data - Working Paper 445

Regulatory pressure on international banks to fight money laundering (ML) and terrorist financing (TF) increased substantially in the past decade. We find countries that have been added to a high-risk greylist face up to a 10% decline in the number of cross border payments received from other jurisdictions, but no change in the number sent. We also find that a greylisted country is more likely to see a decline in payments from other countries with weak AML/CFT institutions. We find limited evidence that these effects manifest in cross border trade or other flows. Given that countries that are placed on these lists tend to be poorer on average, these impacts are likely to be more strongly felt in developing countries.

November 7, 2016

Banking the Unbanked: Evidence from Three Countries - Working Paper 440

We experimentally test the impact of expanding access to basic bank accounts in Uganda, Malawi, and Chile. Over two years, 17 percent, 10 percent, and 3 percent of treatment individuals made five or more deposits, respectively. Average monthly deposits for them were at the 79th, 91st, and 96th percentiles of baseline savings. Survey data show no clearly discernible intention-to-treat effects on savings or any downstream outcomes. This suggests that policies merely focused on expanding access to basic accounts are unlikely to improve welfare noticeably since impacts, even if present, are likely small and diverse.

October 20, 2016

Financial Inclusion in Latin America: Facts and Obstacles - Working Paper 439

In spite of recent progress in the usage of alternative financial services by adult populations, Latin America’s financial inclusion gaps have not reduced, relatively to comparable countries, and, in some cases, have even increased during the period 2011-2014. Institutional weaknesses play the most salient role through direct and indirect effects. Lack of enforcement of the rule of law directly reduces depositors’ incentives to entrust their funds to formal financial institutions. Indirectly, low institutional quality reinforces the adverse effects of insufficient bank competition on financial inclusion.

Multilateral Development Banking Report Cover
October 5, 2016

Multilateral Development Banking for this Century's Development Challenges: Five Recommendations to Shareholders of the Old and New Multilateral Development Banks

Recognizing the growing global premium on environmental sustainability in a climate-challenged world, we call on member governments of the World Bank to take the first step in that direction by renaming the International Bank for Reconstruction and Development (IBRD) as the International Bank for Reconstruction and Sustainable Development (IBRSD)—and to reshape its mission accordingly, toward leadership on issues of the global commons or global public goods that are squarely in the development domain and require a global shareholder base to respond collectively. Shareholders should in turn look to the regional MDBs to take leadership in supporting the new imperative of sustainable development through country and regional operations across all sectors, but particularly in increasing investment in infrastructure that takes into account the logic of low-carbon and climateresilient economies in the developing world. In line with this approach to differentiated roles within an MDB system, the panel makes five recommendations to better realize the MDB system’s potential for meeting today’s development challenges.

Shopping Mall Escalators
August 19, 2016

Should Countries Be More Like Shopping Malls? A Proposal for Service Performance Guarantees

Many developing countries have made progress in political openness and economic management but still struggle to attract private sector investments. Potential investors to these countries have many concerns that can broadly be classified into high costs and high actual or perceived risks. Drawing on insights from existing guarantees offered by bilateral development agencies, national governments, utility companies, and even shopping malls, we suggest that Service Performance Guarantees can be part of the solution, offering investing firms the opportunity to purchase insurance against a wider range of risks than is currently possible and establishing a partnership of donors and recipient governments, accountable to their investor clients.

Alan Gelb , Vijaya Ramachandran , Matt Juden and Alice Rossignol
Payouts for Perils: Why Disaster Aid Is Broken, and How Catastrophe Insurance Can Help to Fix It
July 14, 2016

Payouts for Perils: Why Disaster Aid is Broken, and How Catastrophe Insurance Can Help to Fix It

Disaster aid is often too little, too late. Pressure on aid budgets is prompting donors to find ways to handle more crises with less funding. But the current model of discretionary, ex-post disaster aid is increasingly insufficient for these growing needs, and does little to create incentives for governments in affected countries and donors to invest in risk reduction and resilience. This framing paper sets out how the global community can do better.

July 7, 2016

Development Finance is the Future of US Economic Assistance

On July 7, CGD chief operating officer and senior fellow Todd Moss testified before the Senate Foreign Relations Committee at a hearing titled “An Assessment of US Economic Assistance.” Moss’s remarks emphasized the role development finance in promoting market solutions to pover

pp81
April 19, 2016

Inside the Portfolio of the Overseas Private Investment Corporation

The Overseas Private Investment Corporation (OPIC) is the US government's development finance institution.  Balancing risks, financial needs, and development benefits is riven with numerous tensions, statutory restrictions, and tradeoffs.  This raises an important policy question - how well does OPIC’s actual portfolio balance these competing goals?  Since much data about the OPIC portfolio is unavailable in an accessible format, we built the OPIC Scraped Portfolio database to address this question. 

March 22, 2016

Financial Regulations for Improving Financial Inclusion

As recently as 2011, only 42 percent of adult Kenyans had a financial account of any kind; by 2014, according to the Global Findex database, that number had risen to 75 percent, including 63 percent of the poorest two-fifths. In Sub-Saharan Africa as a whole, the share of adults with financial accounts, either a traditional bank account or a mobile account, rose by nearly half over the same period. Many countries in other developing regions have also recorded, if less dramatic, gains in access to the basic financial services that most people in richer countries take for granted. Much of this progress is being facilitated by the digital revolution of recent decades, which has led to the emergence of new financial services and new delivery channels.

March 22, 2016

Financial Regulations for Improving Financial Inclusion (brief)

As recently as 2011, only 42 percent of adult Kenyans had a financial account of any kind; by 2014, according to the Global Findex, database that number had risen to 75 percent. In sub-Saharan Africa, the share of adults with financial accounts rose by nearly half over the same period. Many other developing countries have also recorded gains in access to basic financial services. Much of this progress is being facilitated by the digital revolution of recent decades, which has led to the emergence of new financial services and new delivery channels.

February 25, 2016

Balancing Financial Integrity with Financial Inclusion: The Risk-Based Approach to “Know Your Customer”

Recognizing the importance of financial inclusion as a policy objective, regulators have endorsed the use of a risk-based approach (RBA) towards know-your-customer (KYC) requirements aimed at strengthening financial integrity.  This paper considers applications of the RBA in domestic banking, mobile money and international financial transactions against the features of a rigorous RBA where both the rigor and level of due diligence and the structure and balance of incentives should be proportional to the balance of risks, including that of exclusion. Recommendations include greater attention to national identification systems and to encourage the use of digital technology to shift from cash-cash wire transfers to more transparent account-account transactions between identified holders.

February 16, 2016

Next Generation Financing for Global Health: What, Why, When, How?

Many researchers and policymakers have hypothesized that funding models tying grant payments to achieved and verified results — next generation financing models — offer an opportunity for global health funders to push forward their strategic interests and accelerate the impact of their investments. This brief, summarizing the conclusions of a CGD working group on the topic, outlines concrete steps global health funders can take to change the basis of payment of their grants from expenses (inputs) to outputs, outcomes, or impact.