Prof. Daniel L. Smith Named to Governmental Accounting Standards Advisory Council
NYU Wagner Associate Professor Daniel L. Smith has been appointed to serve on the Governmental Accounting Standards Advisory Council (GASAC), effective January 1, 2014.
The GASAC, now chaired by the Comptroller of the Commonwealth of Massachusetts, Martin J. Benison, advises the Governmental Accounting Standards Board (GASB) on technical issues, project priorities, and other matters that affect standards-setting for accounting and financial reporting by state and local governments.
Members of the GASAC are chosen from a cross-section of the GASB’s state and local government stakeholders, including users, preparers, and auditors of financial information. GASAC members are selected on the basis of their professional expertise and the depth and variety of experience they bring to their work on the Council. Professor Smith was nominated to the GASAC by the Association for the Association for Budgeting and Financial Management (ABFM), where he serves on the members-elected Executive Committee.
Reimagining Banking for Half the World: Q&A with Jonathan Morduch
Half of the adults in the world (about 2.5 billion people) are “unbanked”—meaning their money is not housed in a secure institution. That’s the central concern of a new book, Banking the World: Empirical Foundations of Financial Inclusion, co-edited by Jonathan Morduch, a professor in the Robert F. Wagner Graduate School of Public Service.
To reach those billions of people, Morduch argues that we need to think about banking in radically different ways. Promising solutions involve using new technologies like mobile phones, as well as re-imagining ideas such as self-governing, village-based saving groups. Understanding those possibilities is a focus of the Financial Access Initiative (FAI), the NYU center that Morduch, an expert in public policy and economics, founded with colleagues at Yale and Harvard.
NYU Research Digest recently sat down with him to discuss old perspectives and new ideas.
How does your research connect two typically incongruent issues like banking and poverty?
Let’s start with poverty, rather than banking. If you’re reading this, you’re probably not poor, but you may have ideas about what it’s like to be poor. Over the past decade, I’ve come to see that my own ideas about poverty were wrong. Elements that I had thought were very important, I now believe are much less important. I had been locked into a logic that was shaped by the available data—large surveys designed to test formal hypotheses, but that turn out to give a very blurry sense of how people actually live their lives.
Rather than surveying thousands of households, a group of researchers started with just a few dozen. Rather than collecting data only once, the researchers visited and revisited the same households many times over a year. Everything bought and sold was noted—all financial transactions, whether at a bank or with family and friends. The intensity of the engagement allowed us to see and understand activities that had been out of view.
This is the data from India, Bangladesh, and South Africa described in your previous book, Portfolios of the Poor: How the World’s Poor Live on $2 a Day. What did it tell you?
The evidence showed that a vast problem for many poor families is not low incomes per se, but the fact that incomes are unreliable and often unpredictable. We often talk about the 40 percent of the world living on under $2 a day per person, but we lose sight of the fact that people don’t literally earn $2 a day. They earn $10 one day, for example, and then very little for a few weeks. Those ups and downs mean that families spend a lot of time figuring out how to borrow and save and deal with risk. We also see people often borrowing to pay for health emergencies, school fees, and simply getting food on the table. But their financial tools are often expensive and unreliable—if they even exist.
You’ve written a lot about microfinance over the years. Is that the solution to “banking the world”?
Microfinance centers on small loans for small-scale entrepreneurs, mostly poor women, who seek capital to grow their businesses. The idea is associated with Grameen Bank of Bangladesh, but the sector has grown quickly, now serving 200 million customers globally, including some here in New York.
Microfinance is an inspiration, but it can also box us in. The starting point of Banking the World is that we need to go beyond the kind of entrepreneurial finance celebrated by microfinance. More fundamental is access to basic money management tools. A huge group of the 2.5 billion unbanked adults are not entrepreneurs. They have jobs, but they still need financial tools—a safe place to save, a convenient way to make payments, short-term loans for general purposes. Entrepreneurs too have needs beyond business. In these ways, the poor are not so different from the rich. It’s been a hard message for some people to hear, but conversations are shifting.
Banking the World collects empirical studies that point to viable solutions, and push us to take a critical look at popular ideas like financial literacy. The chapters also draw new links, like those between finance and under-nutrition. All that, I hope, takes us another step toward solving a problem that is huge—but solvable.
Banking The World
Jonathan Morduch, professor of public policy and economics at NYU Wagner, has co-edited a new collection about the world’s vast “unbanked” population. The book, Banking the World: Empirical Foundations of Financial Inclusion, examines how to realize the goal of extending banking and other financial services to the estimated 2.5 billion people, just over half the adult population globally, who lack them. It. is published by The MIT Press and can be ordered here.
Morduch, a contributor to the volume, is the executive director and co-founder of the Financial Access Initiative, an inter-university research center housed at the Wagner school. The full gamut of essays explore such topics as the complexity of surveying people about their use of financial services; evidence of the impact of financial services on income; and the occasional negative effects of financial services on poor households, including disincentives to work and over-indebtedness. Along with Murdoch, the book's co-editors include Robert Cull and Asli Demirglic-Kunt.
About the Editors:
Robert Cull is a Lead Economist in the Finance and Delivery Private Sector Development Team of the World Bank’s Development Research Group. Asli Demirgüç-Kunt is Director of Development Policy in the World Bank’s Development Economics Vice Presidency and Chief Economist of the Financial and Private Sector Development Network (FPD).
Asli Demirguc-Kunt is Senior Research Manager, Finance and Private Sector, in the World Bank's Development Economics Research Group. She is the coeditor of Financial Structures and Economic Growth: A Cross-Country Comparison of Banks, Markets, and Development (MIT Press, 2001).
Jonathan J. Morduch is Professor of Public Policy and Economics at New York University’s Robert F. Wagner Graduate School of Public Service. He is the coauthor of The Economics of Microfinance (MIT Press) and Portfolios of the Poor: How the World's Poor Live on $2 a Day.
Two Reports Based on Wagner-hosted Dialogue on NYC Retiree Benefits are Published
Earlier this year, NYU Wagner partnered with New York City Public Advocate Bill De Blasio and his office’s nonprofit Fund for Public Advocacy as well as the New York Community Trust to support a rigorous public dialogue about City pensions, retiree health care expenses, and other long-term public obligations and liabilities.
Wagner hosted two of the three forums, which were moderated by New York Times metro columnist Michael Powell and included experts in state and local financal management, including Dan Smith, assistant professor of public budgeting and financial management at Wagner.
To read a just-published summary of the discussions, entitled “Balancing New York’s Fiscal Responsibilities: A Report and Roadmap for Action,” visit here.
You will also find a backgrounder (a companion booklet supported by the Peter G. Peterson Foundation) concerning the size of government and the changing cost, design, and affordability of the City's and State's retirement benefits: “Balancing New York’s Fiscal Responsibilities: Public Employee Pensions & Retiree Health Care Costs.”
Does Financial Literacy Alone Lead to Good Financial Decisions?
NYU Wagner Professor Jonathan Morduch and Public Service Fellow Barbara Kiviat have written a fascinating paper on financial literacy for the McGraw-Hill Research Foundation, entitled "From Financial Literacy to Financial Action."
The paper examines how financial know-how, seen as a tool important to the success of micro-lending strategies in developing countries, can be utilized to help people "turn financial aspirations into meaningful actions" and "develop and stick to concrete financial plans."
Morduch is a professor of public policy and economics at NYU Wagner and the managing director of the Financial Access Initiative (FAI), where Kiviat offers a blog post about the full white paper. She is a David Bohnett Public Service Fellow at Wagner and a research associate at the Financial Access Initiative.