Inclusive Financial Development and Growth Research Project

1. ESRC Reference: ES/N013344/1Delivering Inclusive Financial Development and Growth: 2016-2020 Prof. Victor Murinde, University of Birmingham ESRC Reference: ES/N013344/1: Delivering Inclusive Financial Development &Growth Research Project Workshop SOAS University of London3rd – 4th March, 2017

2. International Network of Researchers • EU • University of Birmingham, University of Groningen, ODI, IDS at the University of Sussex, SOAS University of London, University of Nottingham, Loughborough University • North America • Columbia University, US; Laval University, Canada • Africa • University of Ghana, Legon • AERC, Pan-African, based in Nairobi • NB: We co-opt researchers from African central banks and Universities

3. Co-opting researchers from Africa • Central banks • BCEAO for 8 countries; Bank of Uganda; • Central Bank of Kenya; Reserve Bank of Malawi • Multilateral Development Institutions • African Development Bank; UNCTAD; UN-ECA • Capital Markets • BRVM • Universities • MakerereUniversity; University of Nairobi • ENSEA, Abidjan; UFHB; UCAD • Professional Societies • Econometric Society, ARSC

4. International Advisory Group (IAG) • Hon Dr Louis Rene Peter Larose • Professor Ernest Aryeetey • Professor Manuel Arellano • Mrs Sheila M'Mbijjewe • Dr Caleb Fundanga • Professor John Ddumba-Ssentamu • Professor Clas Wihlborg • Mr Athelston ‘Tony’ Sealey, OBE • Professor S. Njuguna-Ndungu • Dr Ralph De Haas • Mme KannyDiallo • Dr KaifalaMarah • Dr Jo Marie Griesgraber • http://www.birmingham.ac.uk/schools/business/research/research-projects/inclusive-finance/iag-group.aspx • IAG reflects 4 types of stakeholders

5. The Research Project • The research project is clustered around four issues: • institutional framework for inclusive finance • capital flows (private and public) • technological diffusion (especially for SMEs) • Impact on policy and practice

6. Cluster 1: Institutional framework • Meta-analysis and systematic review • Field experiments and new financial products: Rwanda and Ethiopia • Threshold modelling of how institutional quality indicators affect: • financial inclusion and growth • Capital flows • Technological diffusion

7. Cluster 2: Capital flows • Interbank markets in Eastern Africa. • Cross-border banking in East Africa and West Africa. • Foreign banks for financing SMEs • New measures of capital flows

8. Cluster 3: Technology diffusion • Mobile technology and financial inclusion in West Africa • ‘Trust’ research • Technology diffusion and innovation

9. Reporting Progress: Where are we? • The research has started in earnest, progressing well, broadly in line with the original proposal • Phase 1 (Project planning, launch & implementation) • Pre-launch Event: 22 March 2016, at the AERC-SPS on “Financial Inclusion in Africa” • Launch Event: Nairobi • A one day workshop on 28 May 2016 - initial planning meeting with all researchers; • Launch meeting on 30th May 2016 at the AERC Biannual Research Meetings June 2016 • Post-launch Meetings and Activities

10. Phase 2: Updating existing knowledge & building theory • The continuation of Phase I into Phase 2 is reflected on the following webpage http://www.birmingham.ac.uk/schools/business/research/research-projects/inclusive-finance/index.aspx • 15 Specific activities undertaken during this phase, involving all researchers and some IAG members

11. Phase 3: Primary and Secondary Data Collection (November 2016 – October 2017) • Meeting of Researchers and IAG (3-4 March 2017) • Secondary databases • Fieldwork plans

12. Databases constructed so far • Bank level data for all African countries 2005-2016 • African stock market data: market indicators and all companies listed on these markets • Institutional quality indicators for all African countries • Data on measures of financial inclusion in Africa • Sectoral capital flows for Africa

13. Fieldwork Plans? • Cluster 1: cross-country macro data (48 out of 55); field experiment data, Rwanda and Ethiopia • Cluster 2: • For 2.1 - interbank market data; cross-country macro data (48 out of 55); • For 2.2 - at least 7 African countries (Ghana, Rwanda, Tanzania, Uganda, Zambia, Ethiopia and Kenya); • For 2.3 – survey FDI on Ethiopia, Ghana, Rwanda and Zambia; • 135 banks in Burundi, Kenya, Malawi, Rwanda, Uganda, Tanzania and Zambia; • For 2.4 - also 16 African countries in East Africa and West Africa for the period 1995-2015, for which datasets are mainly available from Bankscope, plus hand-collected data • Cluster 3: • For 3.1- mobile banking survey data – Ghana and Kenya; • For 3.2 – micro data on relevant finance, innovation and system variables from the World Bank Enterprise Surveys, FinmarkTrust, and related Innovation Follow-up Surveys. • Democratic Republic of the Congo, Ethiopia, and Kenya

14. Pipeline & delivery dates • Itemised list

15. Insights from stakeholder engagement • Dissemination, ongoing engagement and communication • How? Joint communication plan with other stakeholders: DEGRP/ODI; AfDB; WB Africa; Private Sector; etc.. • Joint conferences/workshops • Examples of employing mixed methods (e.g. using a mixture of quantitative and qualitative research) • Examples of gender analysis in the research project • Disaggregation by structural inequalities other than gender

16. Going Forward • Addressing the issue of capacity building, through AERC, to African researchers working on strategic ‘Inclusive finance’ issues • Component II of the research project: the gap between this project and the 10 research questions in Call 3

17. End • Your inputs (comments/suggestions) are much appreciated • Thank you • Dr Francesca Brown, DFID

18. Research Questions • Cluster 1 •  Work-stream 1.1: What types of institutions are strongly associated with inclusive financial development and sustainable economic growth, for different types of LICs (fragile, land locked, resource endowed, etc…)? •  Work-stream 1.2: In a field experimental setting, how do different financial products (insurance; flexible credit contracts with business training) reduce vulnerability to poverty and increase inclusive growth? • Cluster 2 •  Work-stream 2.1: How does the cross-border interbank market shield (or otherwise expose) the domestic banking system against (or to) contagion in the East African countries and how does this affect financial integration and inclusive growth in the region? •  Work-stream 2.2: How does a new measure of aid inflows (from a recipient’s perspective) compare with existing measures, in explaining the impact of aid on domestic financial development and economic growth, controlling for differences in gender (in the population) and recovery from fragile state conditions? •  Work-stream 2.3: How do different types of international private capital flows interact with domestic financial systems and productivity growth in the real economy in LICs? •  Work-stream 2.4: How do foreign banks (private and public) influence the behaviour of domestic banks (private and public) in responding to credit access needs by information-opaque small firms (classified according to gender, ethnicity, age, etc.)? • Cluster 3 •  Work-stream 3.1: How do new technologies for ‘mobile money’ impact on financial inclusion and economic growth in Kenya and Ghana? • Work-stream 3.2: What is the role of finance in technology diffusion within a framework of national, regional and sector systems of innovations in LICs?