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Financial regulation affects government revenue whenever it imposes both the mandatory quantity and price of government bonds. This paper studies a banking regulation adopted by the National Bank of Ethiopia in April 2011, which forces all private banks to purchase a fixed negative-yield government bond in proportion to private sector lending. Having access to monthly bank balance sheets, a survey of branch costs and public finances documentation, the effect of the policy on government revenue can be tracked. This is compared to three plausible revenue-generating alternatives: raising funds at competitive rates on international markets; distorting the private lending of the state-owned bank; and raising new deposits through additional branches of the state-owned bank. Three main results emerge: the government revenue gain is moderate (1.5-2.6 percent of the tax revenue); banks comply with the policy and amass more safe assets; banks' profit growth slows without turning negative (from 10 percent to 2 percent).

Financial infrastructure is the underlying foundation of a country’s financial system. It comprises all institutions, the rules, and standards of all the systems which enable financial intermediation. The quality of a country’s financial infrastructure determines the efficiency of intermediation, the ability of lenders to evaluate risk and of borrowers to obtain credit, insurance, and other financial products at competitive terms. For instance, the efficient and smooth functioning of the payment, and securities settlement systems facilitates the discharge of financial obligations and the safe transfer of funds across distances and institutions; hence, it support the stability of the financial system. This technical note contains the assessment of the national payment and settlement systems (NPS) infrastructure in Montenegro. The assessment was undertaken in the context of the IMF and World Bank (WB) joint Financial Sector Assessment Program (FSAP) mission to Montenegro during September 1-15, 2015. The assessor was Gynedi Srinivas of the World Bank’s Payment Systems Development Group. The assessor will like to thank the counterparts in Montenegro for their excellent cooperation and hospitality during the mission.

While the microfinance sector is extensively used in Mali (about 1 million members often based in rural areas), the sector has experienced a major crisis for over six years. The clean-up of the microfinance remains the most pressing priority for the Malian authorities and the adoption of the emergency plan for the microfinance sector is a key milestone to cleaning up the sector. While the plan addresses the main issues (restructuring or liquidation not viable MFIs; depositors indemnization mechanism; consolidation of active MFIs; reform and strengthening of the national supervisory body), but the implementation remains very challenging in a context of fiscal tightening and donor’s reluctance to intervene. It is only the Government of Mali that can restore confidence in the sector, and only by undertaking the recommendations highlighted in the emergency plan. One of the most sensitive issues will be to manage the liquidation of a few important distressed institutions together with the indemnization of their depositors.

The existence of a sound financial consumer protection framework is fundamental to increasing access to and usage of financial services, and the quality of those financial services, along with supporting further financial sector deepening. Financial consumer protection is a necessary precursor to building trust in the formal financial sector and thus in encouraging financial inclusion. Further, consumer protection helps ensure that expanded access benefits consumers and the economy as a whole. While increased access can result in significant economic and societal benefits, it can be neutral or even harmful if consumers: (i) cannot exercise their rights as consumers, (ii) cannot select the financial products that suit them best; and (iii) are not protected from mis-selling, fraud, and other market abuses. The main objective of a CPFL Review is to assess the legal, regulatory, and institutional frameworks for financial consumer protection in a country, with reference to the good practices. The following areas are addressed: (i) institutional arrangements, (ii) the legal and regulatory framework, (iii) transparency and disclosure, (iv) business practices, (v) complaints handling and dispute resolution mechanisms and (vi) financial literacy/capability. All parts of a financial sector can be considered, including banking, non-bank credit institutions, insurance, securities, private pensions, and credit reporting.

In September 2014, the Group of Twenty (G20) Global Partnership for Financial Inclusion (GPFI) requested the World Bank Group to undertake a survey in the G20 countries on the issue of commercial banks’ actions to de-risk their operations, specifically in relation to non-bank international remittance service providers or, as they are alternatively referred to throughout this report, money transfer operators (MTOs). The objective of the survey was to assess the status of the de-risking phenomenon in the G20 countries, and to collect evidence from which conclusions on the main drivers and the impact for the MTO market could be drawn. The key findings of this survey and the relative recommendations on potential actions are provided in this report to assist the G20 governments, standard setting bodies, private sector entities and the other relevant stakeholders in the financial sector on future discussions on this topic. In addition to working with the G20 on de-risking in the remittance market, the World Bank Group collaborated with the Financial Stability Board (FSB) and the Committee on Payments and Market Infrastructures (CPMI) to conduct a global survey on access to foreign correspondent banking relationships. This survey is focused on banking authorities, large international banks, and regional/local banks. The G20 Finance Ministers and Central Bank Governors endorsed this work in February 2015.

This Technical Note was prepared in the context of a joint World Bank-IMF Financial Sector Assessment Program mission in Bosnia and Herzegovina during October-November 2014. Financial inclusion in Bosnia and Herzegovina performs relatively well compared to peers, but gaps remain for selected market segments. Financial sector development and access to finance for firms is constrained by weak domestic demand, high collateral requirements and inadequate credit enforcement mechanisms.

The Global Financial Inclusion (Global Findex) database, launched by the World Bank in 2011, provides comparable indicators showing how people around the world save, borrow, make payments, and manage risk. The 2014 edition of the database reveals that 62 percent of adults worldwide have an account at a bank or another type of financial institution or with a mobile money provider. Between 2011 and 2014, 700 million adults became account holders while the number of those without an account—the unbanked—dropped by 20 percent to 2 billion. What drove this increase in account ownership? A growth in account penetration of 13 percentage points in developing economies and innovations in technology—particularly mobile money, which is helping to rapidly expand access to financial services in Sub-Saharan Africa. Along with these gains, the data also show that big opportunities remain to increase financial inclusion, especially among women and poor people. Governments and the private sector can play a pivotal role by shifting the payment of wages and government transfers from cash into accounts. There are also large opportunities to spur greater use of accounts, allowing those who already have one to benefit more fully from financial inclusion. In developing economies 1.3 billion adults with an account pay utility bills in cash, and more than half a billion pay school fees in cash. Digitizing payments like these would enable account holders to make the payments in a way that is easier, more affordable, and more secure.

This research analyses the relevance of pricing models for the attrition of retail banking customers. The analysis is based on a dataset of about 24,000 current account holders at an Italian commercial bank and focuses on their attrition behaviour in the years 2007 and 2008. The aim of the study is to discover the relationship between pricing conditions of packaged current accounts and customer attrition, verifying the differences between the behaviour of younger customers and that of older ones. The findings identify the pricing variables significantly associated with customer loyalty. We discover that customers, and in particular older ones, are less faithful to current accounts characterised by a fixed cost with unlimited free transactions (Disneyworld pricing).

This policy note examines Thailand's programs for preventing poverty among the elderly, and suggests options for improving the effectiveness of these programs. The number of elderly people in Thailand will increase dramatically over the next 30 years, and the elderly already have a higher poverty rate than the population as a whole. Although Thailand currently has a total of eight pension programs, the majority of the benefits go to those who are not poor. In addition, unlike most countries, Thailand lacks a pension and provident fund supervision agency or a consolidated financial institution regulator, and does not appear to have a well-articulated national pension policy. This has led to the development of two major sets of pension programs, with one group sponsored by the ministry of labor and the social security office, and the other by the ministry of finance and the securities commission. These are also supplemented by an assortment of social assistance and community programs sponsored by the ministry of social development and human security and the ministry of interior. This policy note will examine the above issues in more detail and recommend policy options to simplify and coordinate the various pension and social assistance programs aimed at preventing poverty among the elderly, target more spending at the elderly poor, and assure long-term fiscal sustainability.

Financial consumer protection sets clear rules of conduct for financial firms regarding their retail customers. It aims to ensure that consumers: 1) receive information to allow them to make informed decisions, 2) are not subject to unfair or deceptive practices, and 3) have access to recourse mechanisms to resolve disputes. Complementary financial literacy initiatives are aimed at giving consumers the knowledge and skills to understand the risks and rewards of using financial products and services-and their legal rights and obligations in using them. Clear rules of conduct for financial institutions, combined with programs of financial education for consumers, will increase consumer trust in financial markets and will support the development of these markets. International and regional non-government organizations are also playing an increasingly important role in financial consumer protection. The responsible finance forum lists financial consumer protection regulation and financial capability as two of the three pillars of the framework for responsible finance. This summary is not exhaustive but helps illustrate the many ongoing international initiatives that support financial consumer protection. All the initiatives are helpful in strengthening the global response to weaknesses in financial consumer protection. Nevertheless, still more could be done by civil society organizations, particularly those operating at a global level. The World Bank is also supporting the international dialogue on financial consumer protection through development of good practices based on country-level experience and ongoing technical assistance. The good practices provide a comprehensive diagnostic tool to help identify the consumer protection issues in all parts of the financial sector.

The group of 20 (G-20) recognizes data and measurement as an essential foundation for advancing financial inclusion at a global level. The data and measurement sub-group, in its first year, was tasked to identify the existing financial inclusion data landscape, to assess the data gaps, to develop key performance indicators, and to lay out the foundations for the framing of financial inclusion target setting approaches. The purpose of this report, prepared for the global partnership for financial inclusion (GPFI), is to highlight the key findings and recommendations of the data and measurement sub-group during its first year, provide input for a roadmap for the GPFI's work plan for the coming year, and to present key policy recommendations for consideration by the G-20 policy makers for the Cannes summit in November 2011. The policy recommendations presented are relevant at the global level, including both G-20 and non-G-20 countries. The GPFI holds the potential for impact on two levels: (i) incorporating guidance on measurement frameworks and prioritizations of targets through GPFI country-level pilots; and (ii) aligning on the roadmap and determining a toolkit for formulating country level targets or goals to help - operationalize GPFI's universal access vision.

The World Bank is making strides in mainstreaming gender-sensitive approaches to climate action on the ground. Ensuring that men and women have equal access to education, economic opportunities, productive inputs and equal chances to become socially and politically active can generate broad productivity gains, and lead to more inclusive and greener development path for all. For the World Bank, gender analysis is an integral aspect of the upstream social analysis that is required to inform both development policy lending (DPL) and investment lending (IL). It helps identify and suggest ways to mitigate possible risks in terms of exacerbating gender inequality, and highlight opportunities to enhance positive outcomes for gender equality. The entry points for such upstream gender analysis include Poverty and Social Impact Analysis (PSIA) in the case of DPL, climate financing mechanisms are beginning to adopt gender-sensitive approaches in program design and results frameworks, but more needs to be done. Much can be done to improve the effectiveness of climate finance and actions on the ground by ensuring that gender relations are taken into account in design, implementation, and measurement of results. But this can only be achieved through a concerted effort to apply a gender lens in climate finance mechanisms. It matters for development, and it matters for effective action on climate change.

Sri Lanka's population is still largely rural, nearly 85 percent lives outside of cities. There will probably be rural-to-urban migration in the future, which represents a potential opportunity to m-money providers. People working in cities often wish to repatriate their savings to their rural families conveniently and at a low cost. Income is fairly evenly spread across Sri Lanka s provinces, with the exception of the Western Province where Colombo, the largest city, is situated. Its GDP per capita places Sri Lanka near the average of comparable Southeast Asian countries. Malaysia is clearly an outlier with a considerably higher GDP per capita, but Sri Lanka s GDP is higher than that of the Philippines, where m-money has taken off dramatically. Poverty is less of a problem in Sri Lanka relative to countries like Bangladesh or Cambodia, where GDP per capita is much lower. The key point is that Sri Lanka is at a different stage in its economic development and is unlikely to have the same socioeconomic conditions that made m-money in Kenya accelerate so rapidly.

This assessment forms part of the joint International Monetary Fund (IMF) World Bank Indonesia Financial Sector Assessment Program (FSAP) which is being undertaken during 2009-2010. The assessment, which covers the private sector equity and corporate bonds securities system's observance of the Committee on Payment and Settlement Systems / International Organization of Securities Commissions (CPSS/IOSCO) recommendations for securities settlement systems, was conducted during an ad hoc mission. The assessment focuses on two types of trades. First the clearing and settlement process is assessed as regards equity transactions traded on the stock exchange Indonesian Stock Exchange (IDX), cleared through the Clearing and Guarantee Corporation (KPEI) clearing system (e-CLEARS) and settled through the Central Securities Depository for the Stock Exchange securities (KSEI) settlement system (C-BEST). In addition, the assessment focuses on corporate bond transactions, which are traded outside the exchange and settled through the KSEI settlement system (C-BEST).

As part of its Global Policy Initiative, Consultative Group to Assist the Poor (CGAP) partnered with the Superintendence of Banks, Insurance and AFPs of Peru in late 2008, with the purpose of enhancing the understanding of the issues and trends in consumer relations when financial services are delivered through branchless banking, particularly through agents, which are used in ever increasing scale in Peru. The product was this joint report. Three other countries with relevant experience in branchless banking (Kenya, Brazil and India) participated in a similar exercise at approximately the same time. As in the case of Peru, the exercise gave an opportunity for regulators of each jurisdiction to look at their regulatory and institutional framework for protecting branchless banking users, evaluate their regulatory and supervisory actions, and identify areas for improvements. A forthcoming CGAP focus note complements the effort, by making an overall evaluation of the lessons learned in these countries and drawing on the knowledge from other pioneer countries such as South Africa, Mexico, Colombia and the Philippines. The focus note will point out and address priority areas of concern and possible regulatory and policy options to address them. The first part of the report outlines the financial inclusion efforts currently being undertaken by the Superintendence. The following section summarizes the most important points of the legal and regulatory framework for financial consumer protection, pointing out any specificity of branchless banking. The third part describes the branchless banking business in Peru and describes the issues and problems identified in the relationship between branchless banking clients and providers, and the supervisory and enforcement implications. The last section draws conclusions and makes recommendations for achieving a balance between openness to innovation and protection in a branchless banking environment.