Release date: 15 August 2021
Author: Suborna Barua, PhD
Title: FinTech in Action: Spatial disparity grows in digital financial inclusion
The number of MFS accounts owned in rural areas is significantly larger than that in urban areas. Bangladesh Bank data shows the rural account holders outnumber the urban account holders by about 1.5 times, i.e., the number of rural MFS accounts is some 1.5 times larger than that of urban accounts. This ratio is was even bigger at 1.9 times in December 2019, which gradually declined over the two years. The overall trend reflects two important messages. First, rural households and businesses who were unbanked and could access the format financial system (e.g., do not or cannot have a bank account) now are brought within the formal market through MFS; they perhaps find MFS as the only trustworthy and reliable way out replacing the traditional human channel for funds transfer. It signals the ability of the MFS platforms to expand financial inclusion because almost all MFS accounts are bank-led in Bangladesh. Second, it signals that MFS accounts are becoming more popular among urban households and businesses lately. Overall, the dominance in rural areas sends a positive message on the role of MFS in fostering financial inclusion and access to finance digitally.
Cite as: Barua, S. (2021). FinTech in Action: Spatial disparity grows in digital financial inclusion. Chart Story 12, Research in Business and Economics by Suborna Barua, PhD. Available at https://subornab.blogspot.com/2020/08/chart-stories.html
TODAY'S CHART STORY (12)
Release date: 13 August 2021
Author: Suborna Barua, PhD
Title: FinTech in Action: Gender disparity grows in digital financial inclusion
The gap between males and females in digital financial inclusion has been widening since the pandemic began. The gap between males and females in owning a mobile financial services (MFS) account closed noticeably in the middle of June 2019; however, the pandemic has perhaps widened the gap again. After Bangladesh identified its first COVID-19 case in March 2019, the share of males and females in total MFS accounts started to diverge significantly. After a consistent divergence since then, about 54% of the 98 million total MFS accounts are owned by males, while 46% are owned by females in May 2021. The broadening divergence took significant decoupling boosts in July 2020 and April 2021. The gender disparity may not be a good message as it indicates reduced digital financial inclusion of females compared to males, despite the government's wholehearted efforts to increase female participation in the economy. The National Financial Inclusion Strategy - Bangladesh (NFIS-B) also raises concerns about the digital divide across genders.
TODAY'S CHART STORY (11)
Release date: 9 August 2021
Author: Suborna Barua, PhD
Title: FinTech in Action: Internet banking grows big in Bangladesh
> Bangladesh has seen unprecedented growth in internet banking, mainly due to the COVID-19 pandemic forcing people to stay home and transact online.
> From December 2019 to Dec 2020, no. of internet banking users grew by 31%, with the number and value of transactions jumping by 42% and 34%, respectively.
> In May 2021, Compared to December 2020, transaction values increased even bigger by 42%; with the number of transactions rising by 24% with an additional 10% users in the market.
TODAY'S CHART STORY (10)
Release date: 7 June 2021
Author: Wahid Ratul, RA
Title: Bike-Sharing: The Pandemic Mobility Winner
Figure: Revenue growth of selected modes of transportation worldwide
> Mobility has been largely hit by the coronavirus pandemic as we can see the ripple effect it had on industries that are largely dependent on the aspect of travelling. One small sector of the field, however, found its time to shine during lockdowns and quarantine: Bike-sharing -- which grew its global revenues by a third in 2020. Meanwhile, all other mobility services suffered hefty setbacks over the course of last year. The single-person set-up and open-air nature of bike riding made it the perfect mode of transportation for the pandemic.
> Air flights are expected to grow strongest in the coming future, but they had also suffered the biggest losses in 2020. The situation is similar for long-distance buses, while trains, ride-hailing and car-sharing fared a little better in the past year. Due to the high pandemic growth, worldwide bike-sharing is expected to only experience moderate revenue gains of 5% in 2021 as mobility services are expected to bounce back in 2021.
TODAY'S CHART STORY (9)
Release date: 12 December 2020
Author: Suborna Barua, PhD
-- Money market liquidity rises, primary issuance decreases during COVID --
- The government seems to have borrowed relatively less from the market during the last year of COVID, as primary issuance of T Bill and T Bond shows a fluctuating yet declining pattern.
- However, secondary trading significantly increases over the years, particularly in the latter half.
--- If compared with the increased COVID-related spending (e.g., stimulus), the patterns of primary issuance suggest the government's ability to raise funds from alternative sources instead of money market borrowing.
--- However, increased liquidity in the secondary market indicates lesser investment alternatives available to the money market participants, i.e., financial institutions, due to COVID-related economic slowdown.
TODAY'S CHART-STORY (8)
Release date: 12 December 2020
Author: Suborna Barua, PhD
Bangladesh's internet banking is set to take a big shift. The number of customers accessing internet banking and the number of internet banking transactions increased over the last year. However, the monthly growth of transaction values seems not consistent over the months.
A higher degree of volatility is characterised by a declining trend in the growth of transaction fund sizes. A consistent level of growth of funds transacted is essential to claim an increased tech into banking services.
The instability should be addressed by the regulators in order to promote the adoption of FinTech in the banking sector.
TODAY'S CHART-STORY (7)
Release date: 10 December 2020
Author: Sajib Hossain, MBA, CFA and Suborna Barua, PhD
Depositors and bankers keep losing money from banking!
Bangladesh financial sector has been experiencing negative real interest rates for most of the months over the last year. The average interest rate on deposits fell to 4.79%, while the average inflation was 5.54% at the end of September. The real interest rate on deposits is -0.75%, meaning that if a customer deposits Tk100 in a bank, the actual amount will be Tk 99.25 after a year instead of generating returns and growing itself.
This is however not the first time negative real interest rates on deposits emerge. For most of the time since January 2019, depositors have been losing money as the nominal interest rates paid by the banking sector remains well below the inflation rates. Such negative real interest earnings happened from January 2019 to June 2019. After turning positive for some brief period, earnings from deposits continue to be negative from March 2020 to till date and the negative magnitude keeps increasing over time.
Not only depositors, banks themselves lose big in real term. The banking sector spread, recently squizzed by the one-digit interest rate ceiling, has always been negative in real terms since January 2019. This means the banking sector loses money from lending and deposit business when their earnings are compared to the inflation rates.
The negative real return on bank deposits, however, could send a good message for the stock market. Alongside negative returns from banks, the Government has put a maximum limit that one can put in govt Sanchaypatra ( maxi 50 lac in both single and joint account except pension holders) and the requirement to submit TIN.
Taken together, it means that a good part of the money must flow to the capital market where dividend yield is still above 3 % ( which means if you buy the stock now, and the price does not change for a year, still you can earn more than 3%, part of which is tax-exempt). The P/E of the capital market is still around 13 times, well below the historical average of 15-16 times, which means that if the prices level hits to historical average in a year, you will have an average capital gain of 15%-20%. Now compare the money market return vs capital market return in the next one year.
TODAY'S CHART-STORY (6)
Release date: 5 September 2020
Author: Suborna Barua, PhD
The stock of Foreign direct investment in Bangladesh shows a highly volatile pattern since 1996 until 2018. Data from Bangladesh Investment Development Authority shows that the share of Fresh equity FDI inflows declined over time while that of Re-investments and Intra-company borrowing by multinational enterprises (MNEs) increased over the period, particularly since 2010. Compared to the 2001-2010 values, the average share of Fresh equity FDI inflows dropped in 2010-2018 to 31% from 52%; while over the same time frame, average share of FDIs from Re-investments and Intra-company borrowing increased to 50% from 36% and to 18% from 12%.
TODAY'S CHART-STORY (5)
Release date: 27 August 2020
Author: Tasneem Nabila Islam
The rogue microscopic organism - COVID-19 not only affected
exports but also imports of Bangladesh. Monthly data from Bangladesh Bureau of
Statistics shows that imports of capital machinery took the largest hit from
January to May 2020 due to the pandemic, followed by food items like Wheat and
Iron & steel. The trend reflects the slowdown of industrial production and
capital formulation in the country over the period, mainly driven by strict
lockdown measures. However, signs of rebound emerge since June 2020 as the
government eases social distancing enforcement across the country.
TODAY'S CHART-STORY (4)"How do bank advances to the private sector responds to interest rates in Bangladesh?"- Growth in bank advances to the private sector shows an ELASTIC (>1) and NEGATIVE relationship with interest rates.- Data from 1976 to 2018 suggests that a 1% increase in interest rate decreases growth in bank advances by roughly 1.88% and vice versa.- It confirms that bank advances to the private sector could be encouraged by allowing a decrease in the market interest rate.
TODAY'S CHART STORY (3)
Release date: 6 August 2020
COVID-19 hits exports of Non-essential goods (such as Food and primary sector) bigger than those of essential goods (mostly Manufactured products)
Source: Author developed based on data from
Bangladesh Bank
- Bangladesh's Food related (Agricultural and Frozen foods) exports shipments were normally falling since September 2019 and COVID-19 made it only faster since January 2020.
- Manufacturing exports were showing a very slow growth before COVID, which began to nose-dive after since January 2020.
- Since the first COVID case on 31 December 2020, particularly the first one in Bangladesh on 8 March 2020, the rates of decline in Manufacturing exports were much bigger than those in the Food related exports.
- Exports show a recover pattern in the recent months since April 2020, however, its sustainability is not guaranteed.
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