This paper introduces a new set of financial access indicators for 139 countries across the globe and describes the results of a preliminary analysis of this data set. The new data set builds on previous work using a similar methodology. The new data set features broader country coverage and greater disaggregation by type of financial product and by type of institution supplying the product -- commercial banks, specialized state run savings and development banks, banks with mutual ownership structure (such as cooperatives), and microfinance institutions. The authors use the data set to conduct a rough estimation of the number of bank accounts in the world (6.2 billion) as well as the number of banked and unbanked individuals. In developed countries, they estimate 3.2 accounts per adult and 81 percent of adults banked. By contrast, in developing countries, they estimate only 0.9 accounts per adult and 28 percent banked. In regression analysis, they find that measures of development and physical infrastructure are positively associated with the indicators of deposit account, loan, and branch penetration.

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Measuring Financial Access around the World

The US dollar is overvalued by about 7 percent, approximately the same amount as estimated last year (May and November 2015). Divergent phases of monetary policy in the United States, on one hand, and the euro area and Japan, on the other, and a collapse in commodity prices drove the stronger dollar. After rising about 5 percent from October 2015 (the base of the November 2015 assessment) to January 2016, the real effective exchange rate of the dollar fell slightly below its October level by April 2016 (the base of the current estimates). This semiannual evaluation also finds the yen is slightly undervalued (by 3 percent) despite its recent strengthening, but there is no misalignment of the other two leading currencies, the euro and Chinese renminbi.

Estimates of Fundamental Equilibrium Exchange Rates, May 2016

Throughout the Western world, there has been a trend in recent years toward the development of rural enterprises (Townroe 1991; Curran and Storey 1993). In China, since the late 1970s the development of rural entrepreneurship has been closely associated with the emergence and development of rural township and village enterprises (TVEs). While considerable attention has been paid in recent years to aspects of entrepreneurship and small business development in China (Bruun 1990; Chau 1995; Siu 1995), hardly any attention has been paid to the nature and contribution of TVEs and the nature of rural entrepreneurs. Accordingly, this article examines the characteristics of Chinese peasant entrepreneurship as well as the environment in which it has been shaped. It starts with a brief review of the history and growth of TVEs before providing a definition of peasant entrepreneurs and a discussion of their characteristics. Town and Village Enterprises One of the most significant achievements in China's economic reform is the emergence and development of TVEs. "Appearing out of nowhere," as Deng Xiaoping was reported to have said in 1987 (Li 1993), TVEs have become an important force in China's national economy. By the end of 1993, TVEs are reported to have contributed two-thirds of the total value of rural social products, and one-third of the total value of national industrial production. TVEs accounted for nearly one-third of the employment in the agricultural sector and one-fifth of the total labor force nationwide. From 1979 to 1991, while China's total societal production grew at an average rate of 10.4 per cent, the total output from TVEs achieved a yearly average increase of 27.5 per cent, more than twice the rate of the total (Li 1993). Table 1 summarizes the development of TVEs between 1978 and 1993. The term "township and village enterprises" first appeared in 1984 in a government document which announced the breakup of the people's communes and a name change from the former "commune and brigade enterprises" to TVEs. In so doing, the government was formally recognizing the individual and joint capital rural enterprises that succeeded the traditional commune and brigade industries. This recognition was hard-won. For a long period before they were recognized, TVEs were regarded as "illegal" and "non-standardized." Under the centrally-planned economy, only those enterprises within the state system were regarded as "legal," and previous efforts to put TVEs under such control had failed. It should be noted that it is not that TVEs chose to stay outside the state planning system, but that the State would not take them in. This "illegal" status later turned out to be the greatest advantage of TVEs, as it distinguished them from state-owned enterprises (SOEs). The market orientation that has guided TVEs from the outset has resulted in their unique characteristics. For example, TVEs enjoy a clear relationship between ownership and property rights, obtain all production factors (capital, raw materials, technology, personnel, and so on) from the market, use independent distribution and supply channels, [TABULAR DATA FOR TABLE 1 OMITTED] are solely responsible for profits and losses, enjoy complete business autonomy with little government interference, and operate under flexible management. In short, whereas the state-owned enterprises constitute planning units under the corresponding state bureaus, TVEs are independent business entities accustomed to the rule of the market. It is in this freer business environment that a new generation of peasant entrepreneurs has grown up. Peasant Entrepreneurs Defined The great achievement of TVEs in the past 17 years has been mainly attributed to Chinese peasant entrepreneurs. But who are they? Before a definition is given of the peasant entrepreneur, it is necessary to consider who or what a peasant is. According to the Shorter Oxford English Dictionary a "peasant" is "one who lives in the country and works on the land; a countryman, a rustic . …

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Chinese peasant entrepreneurs: an examination of township and village

Macroeconomic impact of monetary policy shocks: Evidence from recent experience in Thailand

A growing literature has examined the role of financial literacy in an individual’s income, saving behavior and the use of various financial products. However, so far, no one has examined the relationship between financial literacy and the awareness and adoption of financial technology (fintech) products, i.e., financial products provided via internet-based and mobile-based platforms. This paper examines this relationship in a developing country, the Lao People’s Democratic Republic (PDR). We use information collected in the Lao PDR using the standardized questionnaire developed by the Organization for Economic Cooperation and Development International Network on Financial Education (OECD/INFE) to calculate our financial literacy. We find that a higher level of financial literacy has strong and positive effects on an individual’s awareness of fintech products. This result still holds when we use a set of instrumental variables for the financial literacy variable. However, there is insufficient data to find a significant relationship between financial literacy and the use of fintech products.

/pdf/fintech-and-financial-literacy-in-the-lao-pdr-1cu1phv99w.pdf

Fintech and Financial Literacy in the Lao PDR

Financial services in Thailand are undergoing rapid transformation. The adoption of digital payments has been growing at an exponential rate, thanks to various collaborative initiatives between the public and private sectors, as well as competition between financial services providers themselves. In the future, with mobile banking penetration reaching a critical level, competition for digital savings and borrowing products is also expected to be fierce. Although financial technology (FinTech) is expected to promote financial inclusion, and encourage better financial literacy, many challenges remain. This paper first reviews the results from the Thai Households Financial Access and Literacy Survey, a bi-annual survey conducted by the National Statistical Office, in collaboration with the Bank of Thailand, which reflect the current stage of financial inclusion and financial literacy in Thailand, as well as potential areas for improvement. A conceptual framework of the connections between FinTech, financial behavior, and financial knowledge and attitude, is then presented, to reflect the various feedback loops that policies could be used to address. The paper then reviews a three-pronged strategy aimed to promote FinTech, financial inclusion, and financial literacy in Thailand: (1) development of interoperable infrastructures that are key foundations of a digital economy; (2) introduction of supportive laws and regulations that help foster FinTech innovations and; (3) promotion of financial literacy at various fronts for people at various stage of life. The preliminary results of the three-pronged strategy for the provision of financial services, financial behavior, and financial literacy are then discussed. The paper concludes by presenting insights and key learning drawn from the Thai experience, which could also be useful for policy makers in other jurisdictions.

/pdf/fintech-financial-literacy-and-consumer-saving-and-borrowing-43ts3os2m5.pdf

FinTech, Financial Literacy, and Consumer Saving and Borrowing: The Case of Thailand

The ongoing globalization process via the reduction and removal of obstacles to international trade and investment and international labor movement has come to an important inflection point due to the global Credit Crisis in 2008-2009. The Credit Crisis left G4 economies considerably weaker in light of the massive fiscal debt, fragile banking sector balance sheets, as well as the nearly maxed-out space for macroeconomic policies. Meanwhile, despite initial setbacks, EM Asia seemed to poise for robust growth going forward and is expected to become the second engine of global growth after the US. In the next decade, EM Asia growth will likely be driven by the prospects of its own regional demand from burgeoning middle class as a result of fast transition from the primary sector to higher-paying manufacturing and service sectors. Additionally, supply side factors will provide significant support for EM Asia growth going forward through the improvement in TFP from intensifying regional production network and frugal innovation, as well as the rise in capital accumulation from greater infrastructure investment and intra-regional FDI. However, for the real sector growth to achieve its full potential, more effective financing that is efficient and inclusive will be needed. The resiliency of the financial system will also be a key factor that must be monitored closely and enhanced to ensure the sustainability of economic growth.

New Globalization: Risks and Opportunities for Thailand in the Next Decade

Along with inefficient resource allocation, as well as major economic and social disruptions, financial instability has been shown to undermine price stability and sustainable economic growth. Since the primary use of monetary policy is to ensure price stability, this paper aims to assess how monetary policy can then be used to contain the risks posed by financial instability. The paper finds that monetary policy decision is unlikely to be timely enough to reduce such risks posed to price stability. Since financial instability can undermine inflation in period beyond the traditional projection horizon, a more comprehensive risk assessment for mediumterm inflation analyses is necessary. The paper thus proposes concrete measures to incorporate financial stability issue considerations into inflation targeting framework. The analyses of the paper focus on the Thai economy under inflation targeting framework. Authors’ e-mail addresses: thammarm@bot.or.th, warangki@bot.or.th, siripimv@bot.or.th * The authors are grateful to Atchana Waiquamdee, Nitaya Pibulratanagit, Amara Sriphayak, Chantavarn Sucharitakul, Titanun Mallikamas and Chirathep Senivongs na Ayudhya for their support and guidance. Special thanks go to Somsajee Pattakitsakul, Ashvin Ahuja, Anotai Buddhari and Piti Disyatat for their technical assistance on empirical tests. We would also like to thank our colleagues in the Monetary Policy Group for their moral supports. All remaining errors are ours. The views expressed in this paper are those of the authors and do not necessarily represent those of the BOT.

Thammarak Moenjak

Papers

FinTech, Financial Literacy, and Consumer Saving and Borrowing: The Case of Thailand

New Globalization: Risks and Opportunities for Thailand in the Next Decade

Monetary Policy and Financial Stability: Finding the Right Balance under Inflation Targeting