Searching: Blogs

Beyond Capital Gains: The Multiplier Effect of Youth Savings

The toll of deep financial strain often promotes destructive decisions and low productivity among impoverished populations.

Can Digital Footprints Lead to Greater Financial Access?

Cell phone use generates data – from basic call data records, to mobile money transactional data, to data from social media usage and so on -- that leaves what can be called a ‘digital footprint.’ The existence of this data is quite extraordinary for those of us interested in developing services for the poor and people with little or no formal financial access. In other words, it is available in a way that can be analyzed.

A Trip Around the Corner: Financial Inclusion in the U.S.

Here at CGAP we love to draw global lessons about financial inclusion from our interaction with stakeholders in various countries. But we often neglect learning from the latest innovations in the developed world since we assume that the differences between these countries and the ones we are most interested in are too great. Last year, a few of us attended the annual Underbanked Financial Services Forum organized by the Center for Financial Services Innovation (CFSI) and returned again this year to learn about the latest innovations in the U.S. market.

Over-Indebtedness in Microfinance – Who Should Bear the Risk?

While microfinance products and lending methodologies vary significantly on the ground, two main features of microfinance have made this enormous expansion of access to finance possible: microlending has become scalable due to cost efficient operating models and due to risk management methodologies that ensured high repayment rates.

Small-balance Savings Accounts: Be Careful What We Wish For?

There is an underappreciated issue in the admirable push to help expand outreach and access to savings accounts amongst the poor: the potential that a savings account, if not suited to an individual’s financial profile, can actually wipe out much of a poor person’s financial assets in a year, or even a few months.

Interest Rates: What Are the Lessons from Russia on "How Much Is Too Much?"

The situation in Russia and other countries is now leading us to want to revisit each of these factors, “deconstructing” the concept of “sustainable” interest rates and review factors, to see if this process sheds some light on whether any given interest rate can be considered responsible.

Exorbitant Interest Rates:A Response from the Russian Microfinance Industry

The exorbitant interest rates offered by so-called “microlending” companies (who look much more like payday lenders or garden variety loan sharks) to clients of the Russian Post recently gave rise to a wave of indignation on the part of the public, government, mass media and the responsible microfinance industry.

Interest Rates on Microloans in Russia: How Much Is Too Much?

Just as the dust settled after a controversial entrance of new players in the Russian microfinance sector about a year ago – those claiming themselves to be ”microfinance organizations” and yet charging 730% interest per annum, another “innovative microfinance” product has totally shocked visitors of the Russian Post, as reflected in a multitude of blogs and in numerous media articles published in recent weeks.

Can MTOs Accelerate the Adoption of Mobile Remittances?

As our understanding of the factors that lead to customer adoption of branchless banking expands, there is a growing consensus that for international remittances services to reach a significant level of scale, they will require an existing mobile money ecosystem that allows for downstream transactions which give users access to a wider array of cost-effective services and products such as payments and access to savings.

Powering Remittances Flows between Russia and Tajikistan

It can be concluded the Russia-Tajikistan corridor offers some interesting insights on how one might link financial products to remittance flows, but it also provides insights on the basic challenges accounting for why no significant scale has yet been reached.

Remittances in Russia and Tajikistan

The potential seems huge to make use of a promising mix of (i) people on both ends of the remittance corridor being in regular contact with banks; (ii) most of the senders and receivers still being unbanked; (iii) the banks having detailed records of remittance clients’ financial flows; and (iv) intense and growing competition among banks, which has led to declining fees for customers to remit money.

Branchless Banking in India: More Reasons for Optimism

In keeping with this optimistic view of a still uncertain India venture, we conclude with three more positive items to highlight. Two reflect new changes by the government and one goes back to the fundamentals.

Mobile International Remittances in the Philippines

Last week, we began a blog series and released a CGAP report on international remittances through mobile banking channels. The series continues this week with guest blogger Paolo Baltao, President of G-Xchange, Inc. (GXI), a wholly owned subsidiary of Globe Telecom in the Philippines. G-Xchange’s GCASH is one of the first mobile wallet services in the world and has been offering international remittances since 2004. In this post, Paolo shares some of the lessons GXI has learned in the past eight years.

What Do International Remittances Mean for Mobile Money?

Since remittances to developing countries were estimated at about $351 billion for 2011, capturing even a small share of this market could be a transformational opportunity for mobile money providers – right?

Details Matter: Why Isn't Insurance More Popular?

Formal insurance products designed for poor households could theoretically provide critical protection against high-impact events that can push a household deeper into poverty, or send it back into poverty when it manages to lift itself up.

Competition Gets a Pat on the Back

People who favor a commercial approach to microfinance and people who oppose interest rate caps have argued for years that competition would bring meaningful reductions in microcredit interest rates. Others have been skeptical about this prediction.

The Promises and Risks of Commercializing Microfinance

The performance of the industry has mitigated and obscured the tensions created by commercialization and accessing mainstream capital markets.

Gold Backed Loans: Unlocking Liquidity for the Poor?

In some parts of South Asia there is a long standing tradition of accumulating gold as a preferred form of saving. Acquiring gold allows small amounts to be accumulated at different intervals; it is not easily lost or destroyed; it is small and lightweight compared to its value; and it is easily divisible into small units which can be sold off as needed.

The Poor Need Better Payment Services

Poor people’s need for domestic payments is often large, whether it is spurred by migrant labor remittances, informal support networks of friends and family, government welfare payments, or utility payments.

What Do Clients Really Want from Insurance?

Some say that insurance does not have a natural ‘fit’ with financial behaviors of low-income households, given that benefits are deferred in time and limited to just those few who claim. But, the shocks experienced by those lacking good risk-management tools have such devastating effects on livelihoods, that it is important not to abandon insurance as a development tool only because the ‘fit’ is not obvious.