With rigorous, objective, and reliable key performance indicators and survey mechanisms, policymakers can accurately diagnose the state of financial inclusion, agree on targets, identify existing barriers, craft effective policies, and monitor and measure policy impact. Country level data and diagnostic assessments inform the design and sequencing of reforms, and can also be valuable to the private sector for adapting the design and delivery of financial services.
Financial inclusion can be measured along the three main dimensions:
- Access indicators reflect the depth of outreach of financial services, such as penetration of bank branches or point of sale (POS) devices in rural areas, or demand-side barriers that customers face to access financial institutions, such as cost or information.
- Usage indicators measure the way in which clients use financial services, such as the regularity and duration of the financial product/service over time(e.g. average savings balances, number of transactions per account, number of electronic payments made).
- Quality measures describe capacity of the financial products and services to match clients’ needs, the range of options available to customers, and clients’ awareness and understanding of financial products.
A fourth dimension, impact of financial inclusion on firms and households, is critical in understanding the influence that financial inclusion has on firms’ and households’ outcomes, such as firm level performance or human capital investments. For more detail, please refer to the Financial Inclusion Strategies Reference Framework (PDF, 876 Kb).
Financial inclusion indicators summarize information from users of financial products and services (through demand-side surveys to individuals, households or MSMEs) or information from financial providers (through supply-side surveys to financial institutions or through reporting to financial regulators). Demand and supply-side data are complementary rather than substitutes, and for better policymaking both should be used in combination. A broad range of financial inclusion data is collected by a number of international organizations, including the World Bank and IMF.
The Global Findex, a new public database on financial inclusion developed by the World Bank and Gallup, and funded by the Bill and Melinda Gates Foundation, has been available since April 2012. Its goal is to reliably measure financial inclusion in a consistent manner over a broad range of countries and over time, allowing thus for cross-country comparisons. The access and usage data was collected through interviews with at least 1,000 people per country in 147 countries through the Gallup World Poll survey over the 2011 calendar year. Indicators developed from this survey may complement other sources, including country-led efforts.
To assist in country-led processes of setting financial inclusion targets and monitoring progress, the GPFI has developed the following G20 Basic Set of Financial Inclusion Indicators (headline indicators):
- Formally banked adults: Percentage of adults with an account at a formal financial institution (can be broken down by gender)
- Adults with credit from regulated institutions: Percentage of adults with at least one loan outstanding from a financial institution (can be broken down by gender)
- Formally banked enterprises: Number or percentage of SMEs with accounts
- Enterprises with outstanding loan from a regulated financial institution: Number or percentage of SMEs with outstanding loan
- Points of service: Number of branches per 100,000 adults
The first four indicators measure the usage dimension and can best be obtained from demand-side data. Countries that do not collect data to develop these indicators can use Findex, WB Enterprise Surveys, or IMF FAS data, or can include questions from these surveys in their national surveys. The fifth indicator can be obtained from supply-side data collected by the Central Bank or Ministry of Finance, and measures geographical access of formal financial providers at the national level. These basic set indicators can be then tailored (through sub-indicators) to monitor context-specific issues, such as the fraction of women with financial accounts, the proportion of female-owned firms with a bank loan, or the fraction of adults from rural areas using formal credit.