Is there a causal link between extending financial inclusion (FI) and economic growth? Is it unequal access to FI that matters, or unequal access to the terms on which it is offered? If FI is a good, who should pay for its extension to the poor - nation states, NGOs, development bodies, the poor?
Proponents of financial inclusion point to a correlation between the economic growth of a country and the development of its financial services sector. But it is not obvious in which direction any causal link runs. Is it the fact that the process of industrialisation put money in the hand of the working classes that led to increased demand for financial services in developed countries, or is it the case that increased supply of financial services to the poor of itself generates economic growth? The case of microfinance, where after some fifty years of extending credit to the poor in developing countries some evidence might be expected, is examined. This panel will also examine the widespread assumption that it is unequal access to financial services that is the problem that needs to be addressed, as opposed to unequal access to financial inclusion on affordable terms to the poor themselves that should be the centre of sustainable development goals. Finally, if we assume for now that financial inclusion does provide economic growth and alleviate poverty, at least if offered on affordable terms for the poor, who should pay for this good? If financial inclusion on affordable terms is in fact a public good, who should take responsibility for its provision if it is not commercially sustainable - nation states, NGOs, development bodies, the poor?