J Michelle Brock, Ralph De Haas, 07 October 2019

Discrimination in access to financial services can prevent women from exploiting their entrepreneurial potential. This column reports on a lab-in-the-field experiment to test for the presence of gender discrimination in small business lending in Turkey. It finds that while unconditional loan approval rates are the same for male and female applicants, there exists a more subtle form of discrimination, with loan officers 30% more likely to make loan approval conditional on the presence of a guarantor when an application appears to come from a female instead of a male entrepreneur. This discrimination is concentrated among young, inexperienced, and gender-biased officers.

Cristian Badarinza, Vimal Balasubramaniam, Tarun Ramadorai, 26 February 2019

Over the past few decades there has been great interest in taking formal finance to households around the world, especially in emerging economies. Using micro-level data from six emerging economies – China, India, Bangladesh, the Philippines, Thailand, and South Africa – this column creates harmonised measures of household assets and liabilities. The findings suggest that there is still much work to be done to truly financialise household balance sheets. There are many differences between the management of wealth between emerging economy and advanced economy households that we do not yet understand. 

Tobias Berg, Valentin Burg, Ana Gombović, Manju Puri, 24 August 2018

Digitisation is one of the major trends of our time, with all of us constantly leaving footprints in the digital sphere. This column evaluates the value of digital footprints for credit scoring and finds that easily accessible variables from such footprints have a predictive power that equals or exceeds that of traditional credit bureau scores. Analysing borrowers’ digital behaviour may present an opportunity to boost financial inclusion in developing countries, where the inability of the unbanked population to participate in financial services is often caused by a lack of information infrastructure.

Stephen Cecchetti, Kim Schoenholtz, 26 June 2018

Over the past six years, more than 1.2 billion adults have gained at least basic financial access through a financial institution or their mobile phone. This column discusses the benefits of financial inclusion, key trends regarding access since 2011, and the means for achieving the World Bank’s goal of universal financial access. It also argues that if the nations of Africa develop institutions to support strong, stable and balanced growth—including the necessary financial apparatus—they can become the primary drivers of global expansion in the remainder of the 21st century.

Timur Kuran, Jared Rubin, 28 April 2018

Poor people pay much more for credit than wealthier people because they are believed to be more likely to default, but this might not always be the case if the enforcement of repayment is biased in favour of wealthy people. This column uses evidence from Ottoman Istanbul to show that where courts favoured the rich and wealthy, these groups faced higher relative borrowing costs. Those with the greatest capacity to invest in capital and entrepreneurial activities thus paid the most for credit, possibly contributing to the slowdown of economic growth in the region.

Thorsten Beck, Maria Soledad Martinez Peria, Maurice Obstfeld, Andrea Presbitero, 12 April 2018

Research has shown that financial inclusion is closely linked to economic development and growth. However, more work is needed to establish the magnitude and channels of this effect and to pinpoint the types of financial services that have a stronger payoff without threatening financial stability. This column tackles these questions by presenting new evidence from a recent IMF-DFID conference on financial inclusion. It also suggests avenues for future research on the topic.

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