Jake Kendall

Measuring Financial Access around the World

This paper introduces a new set of financial access indicators for 139 countries across the globe and describes the results of a preliminary analysis of this data set. The new data set builds on previous work using a similar methodology. The new data set features broader country coverage and greater disaggregation by type of financial product and by type of institution supplying the product -- commercial banks, specialized state run savings and development banks, banks with mutual ownership structure (such as cooperatives), and microfinance institutions. The authors use the data set to conduct a rough estimation of the number of bank accounts in the world (6.2 billion) as well as the number of banked and unbanked individuals. In developed countries, they estimate 3.2 accounts per adult and 81 percent of adults banked. By contrast, in developing countries, they estimate only 0.9 accounts per adult and 28 percent banked. In regression analysis, they find that measures of development and physical infrastructure are positively associated with the indicators of deposit account, loan, and branch penetration.

The Internationalization of Venture Capital and Private Equity

This paper investigates the internationalization of venture capital (VC) and private equity (PE) investments. We derive flows between countries of VC and PE investments worldwide, relying on comprehensive firm-level data sources, covering three decades and about 100 countries. A gravity analysis indicates that distance, common language, and colonial ties are significant factors in directing these flows. Additionally, the presence of high-end human capital, a better business environment, high levels of military expenditure, and deeper financial markets are important local factors that attract international venture capital. There is also evidence of path dependency and persistence in VC and PE flows, indicating network effects and fixed costs of entry may be at work. Further analysis suggests the internalization of VC and PE is an ongoing story. Prior to the 1990s, VC was primarily a US-only phenomenon. The globalization of IT activities induced the US venture capital industry to mature, and to start exporting its unique skills as VC managers. The US is now a dominant net exporter of deals, though most crossborder deals are still either to or from the US. China has emerged as the dominant net importer, followed by Sweden, Canada, the UK, France and India. For deals outside the US, cross-border participation has been the norm, while US-located deals have been almost exclusively domestic, involving a higher percent of international participation only after 2001. In the past few years, domestic VC capacity has begun to emerge in many countries where it did not exist previously.

The internationalization of venture capital

Purpose - The purpose of this paper is to investigate the factors which affect the market for international venture capital (VC) investments, relying on comprehensive deal-level data sources, covering three decades and about 100 countries. Design/methodology/approach - A gravity analysis indicates that distance, common language, and colonial ties may have been significant factors in directing these flows. Findings - The paper documents major shifts in the nature of international flows. The presence of high-end human capital, a better business environment, military expenditure, and deeper financial markets are important local factors that appear to attract international VC. There is some evidence indicating network effects and/or fixed costs of entry may be at work. France, Israel, Canada, India and China were consistent net importers of VC deals, with China emerging as the largest net importer of VC. Originality/value - The paper investigates the increasing internationalization of VC investments in recent years and assesses the factors which determine the destination of cross-border VC investment flows.

Indian Capital Control Liberalization: Evidence from NDF Markets

This paper analyzes the extent to which the effectiveness of capital controls in India have changed over time. We begin by calculating deviations from covered interest parity utilizing data from the 3-month offshore non-deliverable rupiah forward (NDF) market. Then, using the self-exciting threshold autoregression methodology, we estimate a no-arbitrage band whose boundaries are determined by transactions costs and by the effectiveness of capital controls. Inside the bands, small deviations from CIP follow a random walk process. Outside the bands, profitable arbitrage opportunities exist and we estimate an adjustment process back towards the boundaries. We identify three distinct periods, and estimate the model over each sub-sample in order to capture the de facto effect of changes in capital controls over time. We find that de facto capital control barriers: (1) are asymmetric over inflows and outflows, (2) have changed over time from primarily restricting outflows to effectively restricting inflows; (3) arbitrage activity closes deviations from CIP when the threshold boundaries are exceeded in all sub-samples. In recent years, capital controls have been more symmetric over capital inflows and outflows and the deviations from CIP outside the boundaries are closed more quickly.

Bridging the Digital Divide in Rural India

The focus of this article is an alternative policy approach to bridging the digital divide, through organisational innovations that provide low cost Internet access in rural India. We use survey data from 500 individuals in four states of India: Haryana, Madhya Pradesh, Punjab and Rajasthan, to examine factors influencing patterns of computer and Internet use. We estimate logit and multinomial logit models, using microeconomic variables and infrastructure factors. We go beyond simple analyses of penetration at the country level, to understand the microeconomics of computer and Internet use in rural India.

Internet Kiosks in Rural India: What Influences Success?

In this paper we investigate an example of a very widely applied model for the delivery of IT services to rural and poor populations. The model is one where limited intervention to support infrastructure and coordinate resources is combined with market-based delivery of IT services to the end user (what we call here the “sustainable franchise model”). Though this model has been deployed world-wide by governments, NGOs, and development institutions in the past few years, there has been little research into the determinants of success in such a model. In this paper we examine the example of n-Logue, a franchise of over 1000 locally-owned, Internet kiosks in rural villages in India. We seek to assess how this new sustainable franchise model has worked in practice by analyzing data from 74 of n-Logue’s kiosks. Among other things, we find that gender and education do not affect success, while location and other measures of social standing (age and caste) do. We also find that the uses that villagers have for IT services are not so different from those which first world users have. The lessons we draw from this example are that while local customs and practices must be taken into account (e.g. the caste system), it is not a foregone conclusion that social biases (e.g. against women) cannot be mitigated by good program design.

Performance of Internet Kiosks in Rural India

We investigate the determinants of revenue of small-scale entrepreneurs in a developing nation. We study these entrepreneurs in the context of a very widely applied model for the delivery of IT services to rural and poor populations. The model is one where limited intervention to support infrastructure and coordinate resources is combined with market-based delivery of IT services to the end user (what we call here the ‘sustainable franchise model’). Though this model has been deployed world-wide by governments, NGOs, and development institutions in the past few years, there has been little quantitative research into the determinants of revenue performance in such a model. In this paper we examine the case of n-Logue, a franchise (at the time of sampling) of over 1000 locally owned, Internet kiosks in rural India. We analyze data from 74 of n-Logue’s kiosks. Among other things, we find that gender and education do not affect revenue, while location and other measures of social standing (age and caste) do. We also find that the uses that villagers have for IT services are not so different from those which first world users have. The lessons we draw from this example are that while local social structures must be taken into account (for example, the caste system), it is not a foregone conclusion that social biases (for example, against women) cannot be mitigated by good programme design.

Regional Inequality in India in the 1990s: A Further Look

This paper examines changes in regional inequality in India in the 1990s, using data for 59 of India’s 78 agro-climatic regions from the National Sample Survey. It extends the work of Singh et al. (2003) in two ways. First, it allows for differences in baseline growth performance across individual states. It confirms the relatively poor performance of eastern states in the 1990s. Second, it also analyzes economic performance using NSS consumption expenditure data. In this case, it finds that there was conditional convergence for urban households, but not for rural households in that period.

Research and Impacts of Digital Financial Services

A growing body of rigorous research shows that financial services innovations can have important positive impacts on wellbeing, but also that many do not. We first describe the latest evidence on what works in financial inclusion. Second, we summarize research on key financial market failures and on products and innovations that address specific mechanisms underlying them. We conclude by highlighting open areas for future work.

Regional inequality in India in the 1990s: A district-level view

This paper examines changes in regional inequality in India in the 1990s, using data for 210 of India’s districts, spread across nine states. It provides a finer-grained quantitative analysis of growth patterns than has hitherto been attempted for India. The methodology is that of cross-section growth regressions, which seek to explain longer-run growth rates in terms of initial conditions of development. By identifying these connections, the study seeks to illuminate the role of aspects of physical infrastructure, financial development and human capital in influencing regional patterns of growth. In turn, this may have implications for government policies at the national and state levels. We find no evidence for divergence, but evidence for growth convergence in some cases, dependent on initial conditions. The district level results are supportive of the importance of literacy, and access to finance and roads. The methodology can be used to identify districts which may require additional policy intervention along these dimensions, as well as districts where the performance is worse than the average, even after conditioning on development measures, suggesting other causes of backwardness.