What Drives Financial Inclusion at the Bottom of the Pyramid? - Online Data Appendix

The following data was produced by the University of Zurich's Center for Microfinance ("CMF") that in 2017 became a founding partner of the Center for Sustainable Finance and Private Wealth ("CSP"). Data users shall include the following attribution to the CMF each time they display the MF Market Penetration Data: (a) if the data is displayed as delivered or in a graphical format, “Data provided by the University of Zurich's Center for Microfinance, now Center for Sustainable Finance and Private Wealth ("CMF/CSP")” or (b) if the data is displayed in a transformed or modified form, “Original, underlying data provided by University of Zurich's Center for Microfinance now Center for Sustainable Finance and Private Wealth ("CMF/CSP").

For further questions, please contact cmf@bf.uzh.ch

Despite the trillions of dollars managed by the financial industry worldwide, half the world still remains unbanked. This lack of financial inclusion affects disproportionately the poorer and most vulnerable segments of the population. Yet, we still do not have the necessary data to understand which are the causal drivers of financial inclusion at the bottom of the pyramid.

Currently two comparable datasets offer relevant information, but they are limited to only a few countries and years: The World Bank Global Findex survey provides demand-side data by income quantiles only for 2011 (and 2014, to be released in April 2015), and the IMF Financial Access Survey provides supply-side information for households and SMEs only for some country-years.

In order to address this failure, we use microfinance data of different countries across the world in the last decade. In particular, we consider the number of borrowers that microfinance institutions report to the Microfinance Information eXchange, Inc. (MIX). We then use World Development Indicators on the share of the population below the national poverty line to calculate a Microfinance Penetration Rate at the country-year level. This Online Data Appendix provides our Microfinance Penetration Rate for 109 countries between 2003 and 2012.

Download the Microfinance Penetration Rate (MFPR) (XLSX, 57 KB)

By tracking these countries across this period of time, our panel dataset allows to better identify the causal drivers of financial inclusion at the bottom of the pyramid, and to better control for potential endogeneity biases. We propose a quantile regression approach to study the evolution of this index across the world, while controlling for potential omitted characteristics using our panel data.
Our paper accounts for the dynamic and heterogeneous impacts that key drivers may have across different stages of market development.

The map below shows our Microfinance Penetration Rate for 2012, together with the five-year growth rate of each particular country.

Microfinance Market Penetration Map

Legend - Microfinance Market Penetration Map

This table ranks countries according to their Microfinance Penetration Rate in 2012. We also include the five-year growth rate and average of the Microfinance Penetration Rate. Each country link provides an historical plot of comparable Microfinance Information eXchange, Inc. (MIX) , Global Findex and Financial Access Survey data. Refer to the plot explanation at the bottom of the table.

We consider the national microfinance penetration rate (over the total population to make comparisons easier) resulting from the Microfinance Information eXchange, Inc. (MIX) for 2003-2012 across all the countries with available information. This corresponds to the blue lines in our graphs.

We also plot the share of formal borrowers (in the overall financial market) resulting from Financial Access Survey data. This corresponds to the red lines on our graphs.

Comparing the blue and red plots allows us to examine if the behavior of the microfinance market segment implied by Microfinance Information eXchange, Inc. (MIX) data is plausible if compared to that of Financial Access Survey data. Note that the Financial Access Survey includes only supply-side information of regulated financial institutions including regulated microfinance institutions. Microfinance Information eXchange, Inc. (MIX) , on the other hand, includes supply-side information of regulated and un-regulated microfinance institutions.

We include the share of formal borrowers (in the overall financial market) resulting from Global Findex , which is currently only available for 2011. This is the green dot in our graphs. Note that this supply-side information results from household surveys.

In addition, we use the share of microfinance institutions reporting to the Financial Access Survey and multiply it by the share of formal borrowers (in the overall financial market) resulting from Global Findex . This results in a Global Findex proxy of microfinance penetration, which corresponds to the yellow dot in our graphs.

As discussed in our paper, countries with supply-side indicators of financial inclusion that are higher than their demand-side indicators of financial inclusion can have a high financial market complexity.
Based on the country graphs in the paper, we classify countries in 4 groups according to how their overall financial complexity compares to their microfinance market segment complexity.

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