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MICROFINANCE PAPER WRAP-UP: “Global Financial Development Report 2014,” Published by the World Bank

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“Global Financial Development Report 2014,” published by The World Bank, January 2014, 225 pages, available at,,menuPK:8816192




This report draws on research and analysis of the global financial services market to address the needs of low-income people that do not have access to financial services and recommends policies that the authors believe would increase financial inclusion. According to the report, only 50 percent of adults around the world use formal financial services due to cost, distance and inability to meet requirements for opening accounts. However, the authors argue that not all of these underserved people have demand for financial services and policy efforts to provide them with such services can be counterproductive and lead to financial instability. Many financially excluded people could, however, benefit from financial services such as electronic payments, savings and insurance.

The authors also argue that government policy should address issues such as regulatory barriers and legal hurdles that prevent financial access by those that could benefit from such services. Additional recommended measures include protecting creditor rights, regulating business conduct and protecting customers through transparency and financial education. Products such as index-based insurance can also be designed to address market failures and reduce risk to customers. New technologies such as mobile payments, mobile banking and digital borrower identification can increase security

and reduce the cost of financial services.

One of the most important keys to financial inclusion, according to the report, is financial education. Both the delivery mode and content of this education are important. The authors state that providing simple financial training to individuals with limited financial skills has proven to be more effective than business management training programs because the former provides more relevant information that is also easier to understand.

By Megan McGowan, Research Associate

About the World Bank Group:

The World Bank Group (WBG) is a US-based development bank that consists of five institutions, all of which are owned by its member countries. The Group’s mission is to improve living standards for people in the developing world. The World Bank Group encompasses the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); the International Centre for Settlement of Investment Disputes (ICSID) and the World Bank, which consists of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). WBG has 120,000 employees and operations in approximately 120 countries as of July 2013 and an active grant and loan portfolio of USD 173 billion as of June 2012.

Sources and Additional Resourcs:

[1] The World Bank: “Global Financial Development Report 2014,”,,menuPK:8816192




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