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Financial Development and Financial Inclusion

Virtual: Financial Inclusion (FDFI)

Deadline passed

Session No.: CE 21.34V

Location: Kuwait City, Kuwait

Date: March 22-25, 2021 (1 week)

Primary Language: English

    Target Audience

    Mid- to senior-level officials from central banks and government agencies dealing with the financial sector and its regulation, giving preference to those applicants working on issues directly related to financial inclusion.

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    Qualifications

    Participants are expected to have an undergraduate degree in economics or equivalent experience.

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    Course Description

    This one-week course, presented by the IMF's Institute for Capacity Development, will provide an overview of financial inclusion. This topic is of growing interest throughout the world, particularly in emerging and developing economies. Policymakers are increasingly concerned that the benefits produced by financial intermediation and markets are not being spread widely enough throughout the population and across economic sectors, with potential negative impacts on growth, income distribution, and poverty levels, among others. Furthermore, they may also be concerned with the potential negative consequences for macro stability when financial system assets are concentrated in relatively few individuals, firms, or sectors. The course will present a framework for thinking about this topic and assess a country's state of progress, along with the main policy lessons that can be drawn so far from international experience. It aims to:
    - familiarize participants with an economic concept of financial inclusion, placed within the context of the better-known concept of financial depth;
    - introduce the key factors that are expected to either expand or limit inclusion;
    - present the indicators being used to measure inclusion, showing how it has varied across countries and over time;
    - explore the pros and cons of inclusion;
    - outline the different policy options available; and
    - review case studies of successful as well as unsuccessful experiences of attempts to boost inclusion.
    The course will draw heavily on two main bodies of work. The first is the 2014 World Bank Global Financial Development Report, which is devoted to the topic of financial inclusion. This report will essentially be a primer describing the current state of knowledge on the measurement, causes, consequences, and policy options surrounding financial inclusion. The second is the extensive work undertaken by the Consortium for Financial Systems and Poverty (CFSP), led by Robert Townsend, MIT, on the interactions between financial depth, access, growth, stability and efficiency, both at the theoretical level and through micro econometric studies in individual countries such as Thailand and India. The course will consist of six lectures, two case studies (to be determined), and a panel discussion on the final morning. The lectures are
    - Introduction: What Is Financial Inclusion?;
    - Recalling the Power of (Conventional) Financial Deepening;
    - A General Equilibrium Approach to Financial Inclusion and Depth;
    - The Experience with State Banks and Policies to Channel Credit;
    - The Promise of Microfinance; and
    -  Finance of Small- and Medium-Sized Enterprises.

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    Course Objectives

    Upon completion of this course, participants should be able to:

    • Identify the main players and instruments needed for financial market development.
    • Measure the degree of financial development and inclusion for a country or countries using a wide range of standard indicators.
    • Use a simple analytical model to predict the likely outcomes of different policies on financial inclusion. 
    • Assess policy options and strategies for financial development and inclusion from a macroeconomic perspective by identifying potential tradeoffs and possible impediments.
    • Formulate a strategy for policies to support financial development in a country, taking into account initial conditions and links between the financial sector and the macroeconomy.
       
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