Access to finance increases in developing countries

Even as economies globally were contracting as a result of the financial crisis in 2009, access to formal finance in developing countries grew.
An estimated 2.7 billion people around the world have no access to formal financial services, said a report from the World Bank.
But the picture of financial inclusion is shifting, finds a new report by Consultative Group to Assist the Poor (CGAP) and the World Bank Group. Financial Access 2010 -- the second annual survey of financial regulators in more than 140 countries covering the turbulent period between 2008 and 2009 -- shows that the number of bank accounts worldwide was growing even as the volume of loan and deposit accounts dropped.
Sixty-five deposit accounts were added per 1,000 adults in 2009, representing a 4.3 per cent average growth in the number of deposit accounts, it said.
Use of credit services suffered more than that of deposit services from the financial crisis, and the number of loans per 1,000 adults was broadly unchanged between 2008 and 2009. "Access to savings and payments accounts is a basic need,” said Nataliya Mylenko, the report’s lead author.
“The fact that people were using basic deposit services more, even as world financial marketswere experiencing high volatility, confirms how essential these services are to help families manage through risky and uncertain periods," he said, adding that in conjunction with a worldwide effort supported by the Group of 20 to improve the measurement offinancial access, policy makers are committing to an agenda that promotes financial inclusion.
"As there are increasing calls for more and better data around financial inclusion, including from the G20, the annual Financial Access survey will provide key data and help monitor progress over time,” said AlexiaLatortue, CGAP’s Deputy CEO.
The report also presents the first comparable globaldata on lending to small and medium enterprises (SMEs), estimated at $10 trillion in 2009.
Financial Access 2010 shows that regulators are often hampered by a lack of resources or enforcement powers to implement policies for financial inclusion. Nonetheless, the report also shows promising trends, including the expansion of retail infrastructure and use of new technologies to deliver financial services cost effectively.
Globally, one bank branch, five ATMs, and 167 point-of-sale terminals were added per 100,000 adults in 2009. For the first time, the number of ATMs exceeded the number of bank branches in low-income countries like Nepal.
But low- and middle-income countries still lag behind high-income countries in terms of physicaloutreach. "New technologies such as mobile payments and Internet banking are likely to further reinforce this shifting picture of financial inclusion,” said Oya Pinar Ardic, an author of the report.
Whether it is countries’ commitment to policy change or the numbers of people gaining services who werepreviously unbanked, the broad patterns of financial inclusion detailed in Financial Access 2010 arepromising.
"We hope that policy makers will use this data to inform their approach as they work to close the financialaccess gap,” said Janamitra Devan, the World Bank Group’s vice-president and head of Network for Financial and Private Sector Development.
CGAP is an independent policy and research center dedicated to advancing financial access for the world’s poor. It is supported by over 30 development agencies and private foundations who share acommon mission to alleviate poverty. Housed at the World Bank, CGAP provides market intelligence, promotes standards, develops innovative solutions, and offers advisory services to governments, microfinance providers, donors, and investors.