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CGD’s work in this area focuses on strengthening financial systems in development countries through innovation and regulation.
Greater access for the poor to the formal financial system—including payments, savings, credit, and insurance—can greatly improve household stability and development prospects. CGD examines how to strengthen, broaden, and deepen financial systems in developing countries through innovation and regulation. We also study the effects of financial crises, to avoid and mitigate future shocks, and how developing countries can improve their business climates to spur inward investment.
This is the report of a midline evaluation of a randomized controlled trial to increase the utilization of saving and other financial services by women business owners in Indonesia. The trial was motivated by a recent law in Indonesia supporting the development of branchless banking services for a large unbanked rural population and by the results of several studies suggesting that it is possible to stimulate savings and improve a range of downstream outcomes with suitable interventions targeted to under-banked rural populations.
After Nancy Birdsall wrote from Lima last week that she’d been (happily) surprised to see microeconomic issues atop the agenda at the normally macro-heavy World Bank/IMF meetings, I now offer an alternative perspective from the meetings in the Peruvian capital: financial inclusion as a macro issue.
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In a May 2008 speech at a forum organized by the Central Bank of Colombia, senior fellow Liliana Rojas-Suarez analyzes the effect of the global financial crisis on Latin America before an audience of high-level government officials. Drawing on points made in her forthcoming book, Growing Pains in Latin America, she argues that key actions taken before the crisis to switch to flexible exchange rates and avoid major disruptions in their domestic the banking systems have saved Latin America from what could have been even worse repercussions.
Additional reforms are still needed, however—especially those that would enable the implementation of countercyclical fiscal policy to counteract the effects of adverse external shocks.
Rojas-Suarez makes a similar case in a recent interview with CNN en Español in which she compares the actions during the crisis of U.S. Fed chairman Ben Bernanke to those of central bankers in Latin America.
Growing Pains in Latin America: An Economic Growth Framework as Applied to Brazil, Colombia, Costa Rica, Mexico, and Peru will be launched in the fall. A Spanish-language edition, Los desafìos del crecimiento en la América Latina: un nuevo enfoque will be released in partnership with the Fondo de cultura económica
Keeping in mind the low levels of financial inclusion in the country, the Indian authorities have developed a broad strategy to improve access to financial services, as outlined in the report by the Committee on Comprehensive Financial Services for Small Business and Low Income Households, led by Nachiket Mor. Among the committee’s recommendations, payments banks are one innovative tool to further India’s goal of greater financial inclusion.
Hey international community, so you’re feeling helpless as you watch the debt limit crisis unfold in Washington? Here’s something you can do about it.
With the world’s economic policymakers in Washington this week for the annual meetings of the World Bank and IMF, there is no shortage of commentary from foreign officials about the dire impact of a US government debt default (see here, here, and here), including the harm already done in the form of spikes in borrowing costs for their governments.