“SMEs and SDGs: Supporting Small and Medium Enterprises to Achieve the Sustainable Development Goals,” by Maria Teresa Zappia and Lisa Sherk, published by BlueOrchard, November 2017, 28 pages, available at http://www.blueorchard.com/smes-sdgs-supporting-small-medium-enterprises-achieve-sustainable-development-goals-insights-blueorchard-survey/
In this report, the authors explore how improving the business climate for small and medium-sized enterprises (SMEs), may help achieve many of the UN’s Sustainable Development Goals (SDGs), 17 guiding principles intended to help combat poverty, protect the environment, and encourage economic and political stability.
Ms Zappia and Ms Sherk surveyed financial institutions that lend to SMEs in the Caucasus, Central and South America, East Asia and Sub-Saharan Africa. Their findings include that: (1) banks, credit unions, cooperatives and microfinance institutions (MFIs) serve SMEs with loans commonly ranging from USD 20,000 to USD 800,000; (2) in certain markets, the lack of enforceability of collateral is a significant issue; (3) SMEs benefit from stability in commodity prices; (4) SMEs’ outcomes are better when they receive advisory services along with financing; (5) financial institutions in Central America have experienced portfolio deterioration due to over-concentration in certain industries; (6) startups suffer the most from lack of access to finance even though they offer the most growth potential in industries such as renewable energy and financial technology (fintech). In closing, the authors argue that: (1) technology innovations such crowdfunding are becoming more important in the SME market; (2) facilitating securitizations by financial institutions can give them more flexibility in innovating for SMEs; and (3) providing SMEs with skills training can reduce the number of loan defaults.
“Exploring the Economic and Social Motivations for Child and Youth Friendly Banking: Practices from Georgia, Lebanon, Tanzania and Yemen,” by Linas Cepinskas and Jared Penner, published by Child and Youth Finance International, December 2017, 48 pages, available at http://www.microfinancegateway.org/library/exploring-economic-and-social-motivations-child-and-youth-friendly-banking-practices-georgia
The authors of this paper surveyed four financial service providers (FSPs), one each in Georgia, Lebanon, Tanzania and Yemen. Mr Cepinskas and Mr Penner identify factors that can increase or impede the demand for financial products. Governmental regulations – sometimes implemented as part of national financial inclusion plans – can be positive. However, social and political problems can impede demand, such as in the case of Yemen’s civil war.
The authors argue that larger financial institutions have advantages in serving youth because they can allocate more resources to developing and promoting the products that they design for youth, including financial education programs.
Lastly, Mr Cepinskas and Mr Penner find that the most cost-effective medium of communication with young people is social media.
“Learning the Impact of Financial Education When Take-up Is Low;” by Gabriel Lara Ibarra, David McKenzie and Claudia Ruiz Ortega; published by the World Bank Group; November 2017; 38 pages; available at http://documents.worldbank.org/curated/en/366421510084807543/pdf/WPS8238.pdf
In order to explore the effects of financial education on the behaviour of credit card users, Dr Ibarra, Dr McKenzie and Dr Ortega studied cardholders in Mexico. They reviewed data from two groups that volunteered for financial education. One group took financial literacy courses, and the other participated in personalized coaching sessions. The authors compared these groups to a control group chosen from 100,000 credit card users in Mexico. The authors assembled the control group from users that had 16-month card-usage histories that were similar to those of the volunteer group members.
The people volunteering to participate in financial education were 6 to 11 percent more likely to repay more than the minimum amount required by the credit card issuer. Those receiving the interventions were also 3 percent less likely to make late payments.
By Patrick Hirtle-Lewis, Research Associate
Sources and additional resources
Child and Youth Finance International
World Bank Group
World Bank’s Development Research Group
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