Developing financial systems and improving access to finance for households and businesses of all sizes are important for any economy.
As a major investor in financial systems – we’ve been backing financial institutions since 1949 and today have $1.5 billion invested in financial services across Africa and South Asia – we wanted to understand a key puzzle: if all the theory and macro data shows the importance of financial systems, why are the results from on-the-ground impact studies in emerging markets often so muted?
This Insight review helps make sense of the apparent disconnect and suggests some evidence-based paths toward increased impact:
–– A clear focus on household and firm wellbeing
–– Taking account of financial systems, formal and informal
–– Targeting based on specific identifiable gaps in the financial system
–– Building human capital in financial services and the financial system
The review substantiates the case for investing in financial systems, while identifying which questions remain unanswered. It will help shape our impact-led and commercially rigorous strategy for financial institutions, and hope that it will be useful for other investors too.
Insight is our series of practical lessons on private sector investment and development, based on our experiences. Sign up to our monthly newsletter.
