in the 21st Century

More documents

Recommendations

Info

220 Kenya’s Financial Transformation in the 21st Century Financial management opportunities An alternative approach would be to ask very specific questions of respondents regarding their opportunities for financial management. The exact design of these questions could draw heavily from the recent Financial Diaries exercise (Zollmann, 2014). Respondents could be asked questions such as: 1. How many months’ worth of income do you have saved in an institution, with friends/family or under the mattress? 2. If your income stopped completely (e.g. you were made unemployed, or experienced poor business returns or bad weather), how many months would you be able to survive by selling assets, using savings or borrowing? 3. If you needed 5,000 shillings for family expenses, would you be able to get this within three days? 4. If you needed 5,000 shillings for an investment, would you be able to get this within two weeks? 5. If you unexpectedly received 5,000 shillings, do you have a safe place you could save this money? 6. If you wanted to save 100 shillings per week in a safe place, would you be able to do this? Alternative options for presentation of indicators There are two alternative approaches to presenting multiple financial inclusion measures: composite inclusion indicators, and a portfolio approach. Composite measures are the combination of several indicators into a summary measure such as that of the FSM or the Centre for Global Development’s Commitment to Development Index (CGD, 2010). An alternative approach is to present a portfolio of measures per individual respondent or for the average respondent in a certain category (male/female, a particular administrative unit, etc.). An example of this at the country level is the annual tracking of the Millenium Development Goals (MDGs). Composite indicators are more easily understood than a portfolio of individual indicators as they combine diverse measures into a single digestible measure. In contrast, a portfolio of indicators can result in information overload. In a fast-moving and media-influenced policy environment, indicators arguably should deliver short concise messages to stakeholders in the policy process. Further analysis of the construction of composite indicators raises some concerns. Composite indicators involve a two-stage process, namely,
Measurement of Financial Inclusion: Beyond the Binary Measure 221 standardisation and aggregation (including value weighting). We examine each in turn. Standardisation imposes uniform units on disparate indicators. For example, the FSM forces a variety of different indicators that do not lend themselves naturally to ordinal ranking into a scale from one to eight. This process can hide information and can serve to dumb down the contribution of individual disaggregated indicators to financial inclusion discourse. Unless stakeholders commit to tracking such a composite indicator to benchmark performance, its lack of usefullness in research spheres renders it not particularly valuable. Aggregation of standardised indicators into a composite indicator opens up the question of value weighting. When value weighting different indicators, there are two options: weighting the indicators based on a subjective ratio of importance; or remaining agnostic and simply leaving the indicators unweighted and calculating a simple average of the scores. Value weighting is a highly subjective exercise and it can be difficult for researchers to reach a consensus on the relative importance of the component indicators. Nevertheless, there are a number of examples in the social sciences of composite indicators using predetermined value weighting, such as the CGD’s CDI index. The environment score in the CDI, for example, is made up of standardised indicators for climate change (60%), biodiversity and global ecosystems (30%) and fisheries (10%). The CDI overall country score weights the standardised scores for aid, trade, environment, security, technology, migration and investment as equal, transferring the weighting to the choice of sectors for inclusion. It is noteworthy that the FSM summary measure did not become a useful measurement term pursued by policymakers. An alternative approach is to present the set of component indicators and stop short of aggregating them into a summary measure. This approach allows observers to understand the multi-dimentionality of financial inclusion and to encourage informed debate on what it means to be financially included. In this chapter, the portfolio approach is recommended. A separate but important issue relates to the assumptions made with the choice of indicator. Indicators have normative connotations. Every indicator is based on the assumption that ‘things are getting better’ if performance in the indicator improves year on year. For example, the number of lending products a person may have is not something to be maximised, while at the same time one or two products (if used properly) is preferable to no borrowing.
Page 1:
Kenya’s Financial Transformation
Page 4 and 5:
FSD Kenya 5th floor, KMA Centre Cor
Page 6 and 7:
Dedication Ravi Ramrattan was FSD
Page 8 and 9:
vi Kenya’s Financial Transformati
Page 10 and 11:
viii Kenya’s Financial Transforma
Page 12 and 13:
2 Kenya’s Financial Transformatio
Page 14 and 15:
Page 16 and 17:
Page 18 and 19:
Page 20 and 21:
10 Kenya’s Financial Transformati
Page 22 and 23:
Page 25:
CHAPTER 1 Transformation of Kenya
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34 and 35:
Page 36 and 37:
Page 38 and 39:
Page 40 and 41:
Page 42 and 43:
Page 44 and 45:
Page 46 and 47:
Page 48 and 49:
Page 50 and 51:
Page 52 and 53:
Page 54 and 55:
Page 56 and 57:
Page 58 and 59:
Page 60 and 61:
Page 62 and 63:
Page 64 and 65:
Page 66 and 67:
Page 68 and 69:
Page 70 and 71:
Page 73:
CHAPTER 2 The Geography of Financia
Page 76 and 77:
Page 78 and 79:
Page 80 and 81:
Page 82 and 83:
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
100 Kenya’s Financial Transformat
Page 112 and 113:
Page 114 and 115:
Page 117:
CHAPTER 3 Formal Financial Inclusio
Page 120 and 121:
Page 122 and 123:
Page 124 and 125:
Page 126 and 127:
Page 128 and 129:
Page 130 and 131:
Page 132 and 133:
Page 134 and 135:
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
Page 142 and 143:
Page 144 and 145:
Page 146 and 147:
Page 148 and 149:
Page 150 and 151:
Page 152 and 153:
Page 154 and 155:
Page 156 and 157:
Page 158 and 159:
Page 160 and 161:
Page 162 and 163:
Page 165 and 166:
The Digitisation of Financial Servi
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180: The Digitisation of Financial Servi
Page 191: The Digitisation of Financial Servi
Page 195 and 196: Is Kenya’s Digital Revolution Inf
Page 221: CHAPTER 6 Measurement of Financial
Page 224 and 225: 214 Kenya’s Financial Transformat
Page 261: CHAPTER 7 Financial Capability and
Page 280 and 281:
Page 282 and 283:
Page 284 and 285:
Page 286 and 287:
Page 288 and 289:
Page 290 and 291:
Page 292 and 293:
Page 294 and 295:
Page 296 and 297:
Page 298 and 299:
Page 300 and 301:
Page 302 and 303:
show all

in the 21st Century

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?