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Financial Inclusion, Regulation, and Education

Access to affordable financial services for low-income households and small businesses in some Asian countries remains low, impeding economic development and contributing to inequality of income and opportunities. Research in this area identifies and evaluates policy options for expanding financial inclusion while maintaining financial stability.

Increasing financial inclusion involves taking a closer look at financial education, especially how financial services on offer can help lift up disadvantaged segments of society. Financial education can be pursued at all levels of schooling (primary, secondary, tertiary, and adult or even postretirement) and geographic location. For example, people in rural areas can open postal savings accounts at post offices and mobile post offices can collect deposits from farmers and small businesses. Regional banks can handle crowdfunding vehicles such as hometown investment trust funds to support local businesses and individuals. Such services can help small businesses in rural areas access low-cost finance to start up and/or expand their activities. This also addresses the issue of high interest rates often charged by moneylenders.

Despite potential benefits, financial education in many Asian countries is either lacking or inadequate. Moreover, financial regulation and supervision of moneylenders in Asia and the Pacific needs to be established. Among many others, this study examines issues related to financial inclusion, regulation, and education through cross-country statistical studies and country case studies of Asian economies.


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16 November 2017 Remittances as a trigger for postal financial inclusion - Asia Pathways

More than 1 billion adult Asians rely on the region’s 350,000 post offices. Over 2 million employees in more than 350,000 post offices and agents across Asia serve 1 billion of the 3.2 billion adults in the region (more than 57% of the world’s adult population) by providing basic financial services, including the receipt of remittances.

7 September 2017 What are the policy options for reversing productivity decline? - Asia Pathways

The world economy at present is in the middle of profound adjustment. Slow economic growth and obvious economic divisions are resulting in the self-fulfilling “low-growth trap”, while productivity is declining all over the world and income inequality is worsening at the country level.

31 August 2017 Financial literacy and savings: Evidence from Cambodia and Viet Nam - Asia Pathways

Financial literacy has gained an important position in the policy agenda of many countries, and the importance of collecting informative, reliable data on the levels of financial literacy across adult populations has been widely recognized (OECD/INFE 2015a).

24 August 2017 International remittances and poverty reduction - Asia Pathways

The World Bank (2014) estimates that international remittances to developing countries reached $436 billion in 2014. Remittances to the East Asia and the Pacific region and the South Asia region account for the largest and second-largest shares in the world.

27 July 2017 The PRC’s international capacity cooperation exports both industrial capacity and financial risk - Asia Pathways

International capacity cooperation was a 2014 addition to the “Go Global” policy suite that the People’s Republic of China’s (PRC) central bureaucracy expanded throughout 2016. It is the result of seeking a way forward from “new normal” low industrial growth rates and is a novel solution to the industrial capacity utilization problems the PRC has suffered since the 2008–2009 spending stimulus flooded into traditional industries.

12 July 2017 Pointers from Asia for urbanization in Africa - Asia Pathways

Africa and Asia are latecomers to urbanization. In these two continents, less than half live in urban centers, while elsewhere, more than 70% of people do. But Africa and Asia are now rapidly urbanizing, with Asian cities growing at an average of 1.5% per year and Africa’s at 1.1% per year.

7 July 2017 Is corruption “sand in the wheels” for credit markets? Evidence from European MSMEs - Asia Pathways

Bank credit is a crucial financing tool for micro, small, and medium-sized enterprises (MSMEs) given their difficulty in entering equity markets. However, accessing bank credit is not as easy as one might think. Specifically, MSMEs often face difficulties when they need to provide valid collateral to loan officers (Cowan, Drexler, and Yañez, 2015).

30 June 2017 Costs of expanded public pension coverage in emerging Asia - Asia Pathways

The fiscal burden of public pensions in most emerging Asian economies is relatively small, reflecting relatively young populations and limited coverage of the retired-age population in public pension programs.

21 June 2017 Distortions, growth catch-up, and the middle-income trap - Asia Pathways

In theory, a distortion refers to a departure from the perfect competitive equilibrium with no externalities and in which resources have been optimally allocated so that each economic agent maximizes his or her own welfare.

30 May 2017 Twenty years after the Asian financial crisis: The evolution of Asian financial cooperation - Asia Pathways

When Asia was hit by its regional financial crisis 20 years ago, Asian policy makers were quick to call for regional solutions to what was perceived to be a common problem: Asian countries’ dependence on foreign finance.

25 May 2017 Kick-start private infrastructure with future tax-sharing bonds - Asia Pathways

Everybody from President Trump to the Global Infrastructure Forum is trying to think of innovative ways to attract long-term private and institutional investors to pay for the huge and largely unmet demand for new highways, railways, and dams.

19 May 2017 Monetary policy spillovers in emerging Asia - Asia Pathways

For a number of years, the central banks of the major advanced economies have pursued historically unprecedented ultra-low interest rate policies and negative interest rate policies.

12 May 2017 Asia’s financial connections with the rest of the world: Changing patterns - Asia Pathways

As economies in East Asia and the Pacific (EAP) have developed, they have also become important in international financial transactions, both as sources and destinations of cross-border bank lending, foreign direct investment (FDI), and portfolio investments.

13 April 2017 Escaping the middle income trap: Innovate or perish - Asia Pathways

The “middle income trap” captures the situation where a middle income country can no longer compete internationally in standardized, labor-intensive commodities because wages are relatively too high, and it can also not compete in higher value added activities on a broad enough scale because productivity is relatively too low. The result is slow growth, stagnant or falling wages, and a growing informal economy.

5 April 2017 Hometown investment trust funds: A sustainable solution for financing green energy projects - Asia Pathways

The Fukushima Daiichi nuclear disaster was an energy accident at the Fukushima No. 1 Nuclear Power Plant in Fukushima, Japan, initiated primarily by the tsunami that followed the Tohoku earthquake on 11 March 2011 and led to a nuclear shutdown in the country. Japan substituted the loss of nuclear power with fossil fuels, such as oil, gas, and coal, and became more dependent on their imports and consumption.

29 March 2017 Assessing the BOJ’s yield curve control policy - Asia Pathways

The Bank of Japan (BOJ) announced in September last year that it would be switching the focus of its quantitative easing program from monetary base targeting to controlling the shape of the yield curve (Bank of Japan, 2016). A brief comparison of the two frameworks is as follows. The previous monetary easing framework, Quantitative and Qualitative Monetary Easing (QQE) with a Negative Interest Rate, set out three policy dimensions: quantity, quality, and interest rates.

23 March 2017 Why is Income Distributed Unequally? A Comparison of Japan and the United States - Asia Pathways

Japan and the United States (US) are at similar levels of economic development, yet their income distributions are considerably different. Whereas Japan has a relatively equal income distribution, the US is marked by a high level of income inequality. This blog looks at the sources of income inequality in both countries?

15 March 2017 Ultra-low interest rates and wandering overinvestment cycles in East Asia - Asia Pathways

In the 1960s, Kaname Akamatsu (1961) described the gradual relocation of industries from the advanced industrialized countries in East Asia to the less advanced countries during the latter’s economic catch-up process as the “flying geese” pattern.

31 August 2015 Mortgage lending and financial stability in Asia - Asia Pathways

Domestic banking crises often originate in the real estate sector. Therefore, one might conclude that mortgage lending is negative for financial stability.

20 February 2015 Why do we need financial education in Asia? - Asia Pathways

In the aftermath of the global financial crisis (GFC) of 2007–2009, financial literacy and financial education are receiving increasing attention worldwide.

14 August 2014 Increased lending to SMEs aids financial stability - Asia Pathways

A key lesson of the 2008 global financial crisis (GFC) was the importance of containing systemic financial risk and maintaining financial stability.

3 June 2014 Is finance a binding constraint for SME participation in trade in Asia? - Asia Pathways

Small and medium-sized enterprises (SMEs) are a very important part of Asia’s economy. In this article, we explore SMEs and their financing issues with respect to the performance of SMEs in international trade, based on the sample of more than 8,000 companies across the People’s Republic of China (PRC) and Association of Southeast Asian Nations (ASEAN) member states.

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  • 16 Feb 2017 | Video

    Financial Inclusion, Regulation, and Education in Asia

    Policies to promote financial inclusion need to be aligned with economic incentives; otherwise the results may miss targeted groups. Simply setting quotas for financial access for target groups is unlikely to ensure access for the neediest groups. Peter Morgan, ADBI senior consultant for research, explains that a thriving microfinance sector can make an important contribution to financial inclusion.
10 August 2017 Path to financial inclusion is better financial education, literacy - Asia's Developing Future

As finance becomes more inclusive, financial services will reach people who have no experience with formal finance structures, and they may fail to use the services fully or properly. Financial education is a crucial component of successful financial inclusion. Even in advanced economies, significant gaps remain in financial literacy.

26 July 2017 Postal savings accounts benefit women, the poor, and rural people the most - Asia's Developing Future

Putting savings to work is crucial for Asia’s developing economies. In developing Asia, however, access to credit, savings and payment services remains limited. In 2014, only 36 percent of adults in East Asia and the Pacific had formal savings accounts and only 11 percent had access to formal credit.

14 July 2017 Post offices can serve those who can’t access banks but must be regulated so they’re accountable - Asia's Developing Future

Post offices can deliver financial services to people who don’t have access to traditional banks. But developing efficient postal finance isn’t easy. Although it can have a powerful presence in an economy, postal finance can also be inefficient and corrupt.

6 July 2017 SMEs need financial education; post offices can go where banks can’t. Naoyuki Yoshino, ADBI dean

Naoyuki Yoshino, dean of the Asian Development Bank Institute, told VTC10–NETVIET in Ha Noi, Viet Nam, that small business owners need education to be able to access finance.

6 July 2017 Global micro insurance can help reduce poverty - Asia's Developing Future

Micro insurance could potentially reach 3 billion people and earn the industry up to $30 billion from insurance premiums. But only about 5% of the total market in Asia, Africa, and Latin America is covered, and only about 20% of micro insurance is being distributed by microfinance institutions globally.