# **MEASURING MICROFINANCE ACCESS: BUILDING ON EXISTING CROSS-COUNTRY DATA**

# **Introduction**

The workshop for which this paper was prepared was called to consider the need for a new effort to measure direct access to financial services with a focus on those at lowincome. The paper provides a selective review of the diverse sources of data that exist and considers how best to build upon them.

The financial sector is often considered to be the best-documented in terms of statistics. In some markets price and transaction data is available on a minute-by-minute basis or even more frequently. Yet one can look in vain for a table showing, on a comparable cross-country basis, the percentage of households with a savings or deposit account, let alone a clear picture of the characteristics of these households (income levels, regions, etc). Comparable information on borrowing is also lacking: we have information about the total value of lending by financial intermediaries, but we do not have systematic information for example about how many households or micro-enterprises are borrowing, or how much they are paying in interest. Information about insurance and money transmission services has been equally deficient.

Up to now, there has been no wide consensus on what data is needed in this area, or indeed on whether it should be seen as a priority area. For example, the Fund’s General Data Dissemination Standard (GDDS) does not include this area at all,<sup>2</sup> nor does the UNDP’s Human Development Report. The Bank’s World Development Indicators also lack any specific information on access to finance. On the other hand, quite a lot of relevant data of varying quality and covering widely different aspects has been collected by a variety of agencies over the years.

It is increasingly clear that a wide range of **_private and public sector data users_** do have a growing interest in identifying **_who has access to what financial services_** . This kind of information is crucial, for example, in helping financial service providers to design better ways of delivering better services profitably on a significantly larger scale than at present. They need to know more about potential market size, product and service needs and price sensitivity. Policymakers, both at the national level and in bilateral and multilateral donor agencies, as well as concerned NGOs, have a somewhat wider perspective, inasmuch as they are concerned with the effectiveness of their interventions in achieving wider public policy goals. But they too seek to know who does – and does not – have access to financial services and at what price, as well as which services are of most value to poor and low-income households. This convergence of information needs between public and private interests confirms the value of more data collection in this area.

> 2 Unless it be deemed covered under “access to basic services” cf. <u>http://dsbb.imf.org/Applications/web/gdds/gddshome/.  I do not pursue the suggestion which some have</u> made informally that access to basic financial services should be seen as a pre-requisite for basic economic functioning (added, for example, to basic nutrition, healthcare, education, shelter etc.).