Description
This indicator measures the level of financial access in a country as measured by the number of bank branches and ATMs per 100,000 adults and the share of adults that have a financial or mobile money account.
Relationship to Economic Growth
The ability to access affordable credit is a critical element of private sector led growth, particularly for small businesses that often lack the initial capital needed to grow and expand and also for agricultural households, where expenditures on inputs precede the returns from harvest; it also increases a business or household’s ability to bear and cope with risk.81 Access to both formal and informal financial instruments are crucial for rural and poor populations to be able to manage uncertain and uneven incomes and alleviate the costs of poverty while promoting inclusive growth.82 Improving credit access for small business and poor populations can have a substantial impact on agricultural development, poverty reduction, and broad-based economic growth.83
Methodology
Indicator Institution Methodology
The Access to Credit composite indicator is calculated by taking the weighted average of three indicators, two from the International Monetary Fund and one from Findex, which have been normalized and ranked on equivalent scales:
- Financial Access Surveys (IMF): MCC uses two indicators from this dataset: the number of bank branches per 100,000 adults and the number of ATMs per 100,000 adults from the IMF’s Financial Access Surveys. https://data.imf.org/en/datasets/IMF.STA:FAS
- Share of adults with an account (Findex): From the World Bank’s Findex Database, MCC uses the share of the population (adults 15+) with an account. This survey counts both accounts with traditional financial institutions and mobile money. https://globalfindex.worldbank.org/
MCC Methodology
MCC’s Access to Credit Score = [ 0.25 x Normalized ATMs] + [ 0.25 x Normalized Bank Branches] + [ 0.5 x (Normalized Findex)]
This index draws on 2024 data from the Findex database. For the two IMF indicators, the most recent data since 2022 is used. Country scores are reported on the Scorecards as 2024 data. Since each of the sub-components of this index have different scales, MCC created a common scale for each of the indicators by normalizing them. Please see the equations below.
MCC Methodology to Normalize IMF and Findex Data:
- Normalized ATMs = (Number of countries scoring below Country X on IMF’s ATM raw data in the income group) ÷ (Number of Countries scoring equal to or greater than Country X on IMF’s ATM raw data in the income group + Number of countries scoring below Country X on IMF’s ATM raw data in the income group)
- Normalized Bank Branches = (Number of countries scoring below Country X on IMF’s Bank Branch raw data in the income group) ÷ (Number of Countries scoring equal to or greater than Country X on IMF’s Bank Branch raw data in the income group + Number of countries scoring below Country X on IMF’s Bank Branch raw data in the income group)
- Normalized Findex = (Number of countries scoring below Country X on Findex raw data in the income group) ÷ (Number of Countries scoring equal to or greater than Country X on Findex’s raw data in the income group + Number of countries scoring below Country X on Findex’s raw data in the income group)
For example, to calculate a given country X’s score, MCC first finds the number of countries that score worse than that country in the income pool, and the number of countries that have the same or better score than country X on the sub-source. MCC then divides the number of countries below by the sum of the number of countries below and the number of countries equal or above. Missing values are not included in these calculations. Finally, MCC averages the normalized values for each source together (weighting the two IMF scores at 0.25 each and the Findex score at 0.5). If one source is missing, the average of the normalized scores for the other two is used. If two sources are missing, the normalized score for the other is used. If all three are missing, the indicator is considered missing and assigned an “N/A”.