IMF financial access survey identifies decline in SME loans, gender gaps

By Clara Nwachukwu

The International Monetary Fund (IMF) annual Financial Access Survey (FAS), has reported a decline in the balances of outstanding loans to small and medium enterprises (SMEs) and persistent gender gaps in financial access for many economies.  

The 2022 FAS released yesterday presents the 2021 data and highlights the continued expansion in the use of digital financial services—considerably higher than pre-pandemic levels.

Specifically, the FAS reports that outstanding loans to SMEs decreased in most economies, noting that although SMEs play an important role in many economies, they often face greater constraints in accessing finance.  

“The FAS data show that more than 70% of the economies which submitted SME data to the FAS in this round experienced a decline in outstanding commercial bank loans to SMEs in 2021.

“This was a reversal from the 2020 trend, where SME loans remained stable or even increased in many economies. At least partly, this appears to be due to the unwinding of policy measures adopted in response to the pandemic such as loan assistance and wage subsidies,” the report said.

The latest FAS data show that the gender gap in financial access persisted in many economies in 2021. In 2020, outstanding deposits increased for both men and women.

“However, the increase was reversed in 2021, likely due to the end of policy measures adopted during the pandemic to support financial access.

“The decline in deposits was greater for women than for men in 45% of the economies that reported gender disaggregated data.”

The number of deposit accounts, on the other hand, stayed broadly stable or even increased in some countries for both genders in 2021. These findings reinforce the need for continued collection and monitoring of gender disaggregated data on financial access.

Generally, the FAS said microfinance institutions played an important role in some economies promoting the inclusion of unserved and underserved populations, including by channelling pandemic support.

The decline in deposits was greater for women than for men in 45% of the economies that reported gender disaggregated data.

Digital finance rises

IT also noted that the access and use of digital financial services continued to expand, as the pandemic has disrupted the traditional way of accessing financial services, prompting greater use of digital finance.

The FAS data also show a transition from traditional financial access points such as bank branches and ATMs to mobile agents and retail agent outlets in some developing economies since the onset of the COVID-19 pandemic.

The usage of digital financial services has also increased, with the value of mobile money transactions growing from about 40% of the gross domestic product (GDP) to 70% in low-income countries.

Also, the value of mobile and internet banking transactions increased from 225% of GDP to 324% in middle-income countries between 2019 and 2021.

New ways to access finance

The FAS also identified four new types of financial access points, noting that coverage across countries differ.

At the same time, traditional financial services remain important for financial inclusion. For example, the share of depositors continued to grow in all country income groups.

On the other hand, the aggregate values of outstanding loans and deposits as a share of GDP were mostly unchanged between 2020 and 2021 for all country income groups, although outstanding loans declined slightly in middle- and high-income countries in 2021, the report said.

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