Accepted paper:

Is Financial Inclusion inclusive enough for Poor and SMEs?


Su Wint Wah (Institute of Development Studies)

Paper short abstract:

It is commonly accepted that Financial Inclusion is important. However, it needs further investigation to identify how it affects the poor individuals/households and SMEs. This paper explores and answers the question whether access to finance tackles inequality or aggravates inequality.

Paper long abstract:

Financial sector development is a panacea for boosting economic growth. It is a global consensus that a well-functioning financial system is indeed necessary for businesses and households to provide capital, smoothens transactions, facilitates and lowers the costs of remittance, etc. Given the great important role it plays, a lot of governments have tried to solve the issue of access to finance to some extent and made progress. However, is the improved access to credit inclusive enough? This paper has questioned the assumption that allowing greater access to credit is essential to decrease inequality and explored in depth the contributions on the poor households and small firms. The paper argues that (1). Financial inclusion of the poor individuals has had less of an impact on inequality than is often claimed, and (2). Improved access to finance has not enabled SME growth to the extent often perceived. And lastly, the paper concludes with the policies implications to expand outreach and promote inclusion. It also reminds the bankers, policymakers, and development practitioners not to overlook the challenging factors faced by the poor when they try to achieve financial inclusivity.

panel E05
Unequal access to financial inclusion: what matters and what does not (Paper)