Financial Inclusion

As stated in the Sustainable Development Goal (SDG) 8.10 of the UN’s Agenda 2030, financial inclusion is a crucial piece of the puzzle for achieving economic empowerment. Financial inclusion allows people to manage risks, invest in their future, and build businesses (Ade’Soyemi et al., 2020). The UN’s SDG 8.10 targets financial inclusion, a critical economic empowerment aspect (Baffoe et al., 2021). This goal recognizes that financial services like banking, insurance, and credit are essential for full economic participation (Rai et al., 2019). SDG 8.10 calls on countries to strengthen their financial institutions to serve all citizens better. Achievement of this goal involves expanding access to bank accounts and digital financial services, creating financial products for low-income people and improving financial literacy and consumer protection. By promoting financial inclusion, countries can work toward reducing poverty and building a sustainable global economy.

SDG 8.10 is a relatively new and unresearched topic. Therefore, this chapter briefly overviews target SDG 8.10 and the indicators to strengthen financial institutions and expand access to banking, insurance, and financial services. This chapter reviews the reports, agendas, and surveys on SDG indicators 8.10.1 and 8.10.2. A brief introduction appears on the development of SGD targets and the SDG indicators of SDG 8.10. The chapter then summarizes the rationale and measurements for the indicators, including their impact on financial inclusion and micro- and macroeconomics. Finally, the chapter discusses discrepancies, limitations, and the impact of the COVID-19 pandemic on the achievement of the indicators. The conclusion will include possible relevant topics on SGD 8.10 for future research.

We aim to analyze financial inclusion’s forward and backward linkages through financial technology (fintech) and to scope this linkage toward sustainable development goals using a bibliometric analysis and concept mapping. We use platforms such as VOSViwer and R studio to analyze 779 articles collected from the Web of Science database, including keyword co-occurrence analysis and thematic mapping. Our findings show a significant impact of fintech and mobile money on financial inclusion and sustainability, with a focus on the current literature on sustainable development goals, fintech, and mobile money. We also find a substantial gap in the empirical research on cross-country and individual analysis, connecting fintech to financial inclusion toward the Sustainable Development Goals (SDGs). This study will help policymakers, regulators, and academic researchers know the nuts and bolts of financial inclusion and identify the relevant areas that need further research toward reaching the SDGs set by the United Nations.

The Sustainable Development Goals (SDGs) have been developed with a view to enhancing the quality of life in both developed and developing nations. Financial inclusion (SDG 8.10) emphasizes the need for capacity building of domestic financial institutions to provide widespread access to financial services. This chapter investigates the impact of financial inclusion on poverty alleviation, income inequality and non-income dimensions of inequality, namely malnourishment, health, and education. Panel data regression analysis was carried out for 138 developed and developing countries spanning a period of 9 years from 2010 to 2018. Accordingly, changes within countries and across countries were captured over this period of time. Our results indicate that financial inclusion as measured by the Financial Inclusion Index has a strong negative association with poverty but not with the other SDGs that were tested. Therefore, it seems reasonable to conclude that this has ramifications for policy design and implementation. The main contribution of this chapter is that it confirms the significance of developing conducive financial services that, in turn, provide equal opportunities, irrespective of gender, religion, and ethnicity. However, it also highlights that financial inclusion, though necessary, may not be sufficient in the quest to achieve the SDGs.

Traditional banking solutions have not succeeded in creating financial inclusion for the unbanked. Mobile money services, through which telecommunications companies offer financial services through a mobile phone number, increase the accessibility of financial services. For that reason, the proportion of adults with mobile money accounts is one indicator of success for Sustainable Development Goal Target 8.10, which seeks to “strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.” M-Pesa is the world’s first mobile money service, which was born of frugal innovation and increased financial inclusion in East Africa.

Through a case study M-Pesa in Kenya, this chapter demonstrates how approaching financial inclusion from the perspective of frugal innovation generates high-value solutions to help meet Sustainable Development Goals (SDG) 8 and Target 8.10. Frugal innovation, an innovation management mindset that reduces complexity and resource use, subverts the traditional model and trades highly structured and expensive research and development for flexible and inclusive adaptation. As efforts to develop more inclusive financial systems increase, the discipline can be transformational for both developing and developed markets.

Fintech refers to the use of the state-of-the-art technology to provide financial services. The development of fintech has been enhanced by massive data generation, advances in computer algorithms, and growth in processing power, which have been facilitated by broadband internet, cloud computing, and artificial intelligence. It is typically claimed that digital finance is boosting financial inclusion and that digital financial inclusion is conducive to economic growth. While most of the views expressed on the desirability of fintech are optimistic, it is plausible to suggest that the introduction of digital finance should be judged in terms of costs and benefits.

This chapter explores how the deployment of financial digitalization can foster agriculture and inclusive development. It provides critical insights into recent developments in digital finance, how digital finance can drive agriculture and inclusive development, and the challenges associated with financial digitalization. The chapter recommends options for harnessing financial digitalization to foster agriculture and inclusive development.

United Nations (UN) Sustainable Development Goals associated with economic empowerment, financial inclusion, and reducing inequalities are fundamental and timely. This chapter analyzes the political implications of attitudes related to financial literacy, especially as they connect to the global challenge of growing economic inequality. Existing public opinion research suggests that exposure to high inequality influences people’s attitudes toward politics. This discussion analyzes the relationship between inequality and trust in government and how financial literacy shapes these political beliefs.

Data were collected from approximately 1200 adults living in the United States using Amazon Mechanical Turk (MTurk) during January and February 2021. The survey instrument measures people’s perceptions of their finances, financial literacy, trust in government, political efficacy, views about economic inequality, and demographic backgrounds. Results suggest that financial literacy strongly and positively connects to attitudes widely considered healthy in democratic contexts, including confidence in government and political efficacy. Financial literacy also moderates economic inequality’s influence on people’s trust in government. In addition to evaluating connections between inequality, trust, and financial attitudes, this discussion explores the potential long-term consequences of sustainability initiatives and other public policies that address economic injustices.

Financial inclusion (FI) has become an essential strategy for enhancing economic growth and achieving inclusive growth in a country (Karlan et al., Rev Income Wealth 60:36–78, 2014). Although the theoretical relationship between financial inclusion and economic growth is acknowledged, more empirical evidence is necessary regarding the financial inclusion-growth nexus, particularly for small island economies. This book chapter thus aims to supplement the literature by providing an insightful analysis of the hypothesized link for a sample of small island developing states (SIDs). The research also investigates the reverse causal link: economic growth’s role in financial inclusion. A multidimensional financial inclusion index is constructed using the principal component analysis (PCA) and included in a classical augmented Solow growth function. Using a panel autoregressive distributed lag approach (PARDL) to account for the dynamic nature, empirical results confirm that financial inclusion is growth-conducive. The study could not establish any reverse causality using the panel Granger Causality test, validating a unidirectional relationship from financial inclusion to economic growth. Findings from this research supplement the existing literature on this SDG 8.10 goal and provide important implications for SIDs governments to consolidate and accelerate financial inclusion to enhance prosperity.

Financial inclusion is one of the key initiatives taken by policymakers in the Global South to include the section of the population in the mainstream banking and financial system. The initiatives taken by Brazil, Russia, India, China, and South Africa to bring their population into the mainstream financial system can be taken as case studies by the rest of the world as models for financial inclusion. This chapter highlights the initiatives and the results of the various policies across five significant economies, the BRICS countries.

Many countries have recognized financial inclusion (FI) as a priority for policymaking. Financial inclusion generally has positive welfare effects on the financially excluded segments of society. This paper develops a financial inclusion index for 41 African countries to assess their progress in creating inclusive financial systems. The index covers the period from 2010 to 2019 using three financial inclusion dimensions: access, usage, and availability. The proposed index is easy to compute and provides a helpful tool for tracking progress in financial inclusion. The financial inclusion index will assist in the design of appropriate policy measures aimed at minimizing financial exclusion. The paper finds overall mixed progress in financial inclusion trends among the countries, despite the widely held notion that mobile banking has had a notable impact on financial inclusion in many African countries. Nonetheless, results confirm the significant contribution made by mobile banking. Moreover, the drive for inclusive financial systems is motivated by its perceived benefits on growth and human welfare, which are the focus of the sustainable development goals (SDGs) promoted by the United Nations Development Programme (UNDP).

Financial inclusion has been considered a priority policy by policymakers across the world. Governments and policymakers have adopted several policies and strategies to foster financial inclusion. A school banking program is one of those strategies. School banking aims to acquaint students with current banking services and technologies and create savings behavior among children under 18. The result is that school-going students come under a formal financial system that will allow them to participate in the country’s economic activities. Though school banking has gained much attention, it is yet to be empirically investigated as the enabler of promoting financial inclusion. This study fills this gap by examining data from 2011 through 2019. Findings indicate that school banking activities promote access, usage, and depth dimension of financial inclusion. Results suggest that policymakers should make appropriate school banking decisions, leading to full financial inclusion.

This chapter is one of the first studies to specifically analyze the lack of insurance for agricultural microentrepreneurs in Pakistan’s mountainous peripheral Gilgit-Baltistan region. Based on field interviews with 20 fresh fruit farmers and retailers, we found out that even though they are knowledgeable about micro-health insurance, and most have access to banking services, none of the respondents use business or agricultural insurance. The knowledge of agriculture and business insurance (including the benefits and access possibilities) could have been better for microentrepreneurs operating in these sectors. Currently, the sample microentrepreneurs rely on social networks, including family, in case of difficulties, as informal insurance mechanisms. Due to the perishable nature of produce, lack of proper storage facilities, and supply chain problems, the vulnerability of such businesses is high, and lack of insurance further complicates this situation. Based on respondents’ feedback and literature review, our chapter offers several policy implications to further financial inclusion, particularly on the insurance aspect in this region.

South Africa has become increasingly exposed to climatic extremes that often lead to economic losses. With a growing emphasis on the importance of financial inclusion for risk reduction, financial services have an essential role in addressing the impact of climate-related disasters on household finances. Evidence suggests that access to formal financial services can help smoothen consumption, secure livelihoods, and reduce climate vulnerability after a climate-related disaster. However, studies show that vulnerable rural populations, who bear a disproportionate burden of climate stress, are ill-equipped to deal with shocks, and face significant financial barriers when trying to cope with the financial impacts of climate-related disasters. This study sought to better understand the extent to which financial inclusion contributes to climate resilience in the context of the sustainable development goal, target 8.10, and to identify critical barriers and opportunities faced by survivors of climate-related disasters in rural South Africa. The study involves original field research conducted in South Africa. Semi-structured, in-depth interviews were conducted with experts for the local financial services market, experts in the aid provisions process, and experts on the impact of adverse weather events. The interviewees identified more barriers than opportunities, and were particularly concerned with the extent to which the formal financial sector adequately addresses the needs and circumstances of vulnerable groups. The experts were of the opinion that the best opportunities lie in the informal banking system, and that most barriers can be overcome through digital literacy and financial training.

A new area of research has recently emerged on the importance of gender disparities in financial inclusion. The sustainable development goals address improving the capabilities and operations of financial institutions, and this is one of the common topics that is highlighted within the context of SDG subgoal 8.10. Financial inclusion is now viewed by many countries in the Global South as one of the most crucial development initiatives. Turkey has joined the movement in recent years, and officials have developed an agenda for financial inclusion. While Turkey’s financial inclusion plans aim to increase the reach of the financial system, they mostly disregard the importance of women in financial inclusion, which is becoming more widely recognized. This chapter tries to address a variety of reasons, including political, cultural, and social issues, as well as financial issues that hinder women’s financial participation in Turkey. This study aims to show the importance of understanding gendered social norms in favor of fairness in financial inclusion in order to reduce the gender gap in access to and use of financial services. Additionally, understanding the financial inclusion of women in Turkey offers policymakers a fresh viewpoint for future consideration of the new financial inclusion rules.

The role of fintech in supporting financial inclusion has gained momentum among international bodies. The UN sustainable development agenda of 2030 and the G20 document on digital financial inclusion key principles both stress the need to use fintech to reduce financial exclusion and to enhance income equality. The debate around financial inclusion has increased in the past 2 years, especially with the crisis of Covid-19. The pandemic accelerated the development of Morocco’s digital financial environment, with government and private firms deploying fintech tools for payments and other financial transactions. This chapter has the following purposes: (1) to review the literature that examines fintech as a driver to financial inclusion, (2) to investigate critical barriers that prevent some segments of the Moroccan population from accessing financial services while giving indicators that reflect financial exclusion, and (3) to shed light on fintech advances and how the Kingdom of Morocco intends to leverage the contribution of fintech firms in the implementation of its National Financial Inclusion Strategy (SNIF).

Mobile money (MoMo) transactions have become increasingly popular in much of the developing world as means of innovative financial electronic transactions. Thus, the increasing popularity of the mobile phone has found itself extraordinarily significant in conducting financial transactions, of which mobile money transfer is crucial. Part of this phenomenon could be attributable to the growing information communication technology (ICT) use that manifests in the application of portable mobile devices. Drawing on the underlying concepts of interpretive research philosophy undergirded by qualitative orientation to data collection and analysis, this academic effort studies two rural communities in Ghana’s second most populated region, Ashanti, to understand how MoMo transactions encourage financial inclusion for socioeconomic development in rural communities. The development literature was a lens to yield the findings suggesting financial inclusion’s instrumentality in enhancing socioeconomic development in rural communities. This revelation significantly contributes to knowledge and practice as the development literature has underemphasized this technologically inspired component in the qualitative research community. The study, therefore, contributes to the growing body of literature and theory surrounding the issues driving the increasing popularity of mobile money transactions and its associated contributions to the socioeconomic development of the life of rural communities. Future studies should examine how much security and privacy issues can hamper this development effort. Again, future policy should look into strengthening the infrastructural capabilities of rural communities to ensure sustained development through financial inclusion in reinforcing socioeconomic development in disadvantaged communities.

This chapter empirically analyzes the link between financial inclusion (SDG 8.10) and economic activity. Instead of following the past literature and approximating financial inclusion by variables only capturing traditional financial services, this chapter considers non-traditional financial services, including mobile money and nonbranch retail agent outlets. With the help of the normalized inverse of the Euclidian distance and a one-way fixed effects panel model, this chapter documents empirically robust results about the positive link between financial inclusion and the level of economic activity. In addition, a break between poverty and financial inclusion is established by regressing the calculated index of financial inclusion on demographic, socioeconomic, and other variables concerning the health and depth of the financial sector. The implications of this finding in this analysis are twofold. First, it highlights the improvements in low, lower-middle, and upper-middle-income countries regarding outreach to financial services in the last decade. Second, it shows that the level of education and the soundness and depth of the local financial sector are essential in reaching higher levels of financial inclusion. Overall, our results emphasize the importance of targeted policies to increase the accessibility, availability, and usage of the financial sector to attain sustainable and long-lasting economic prosperity.

For the past decade, Mobile Money (MM) systems have become very popular in low- and middle-income countries, particularly in sub-Saharan Africa, and have transformed millions of lives by advancing financial inclusion, as required by SDG 8.10. Adoption continues upward within the Middle East and North Africa region (MENA), possibly due to the recent COVID-19 pandemic. Overall, the MM industry has shown remarkable recent growth in MENA, with the fastest global growth in 2021. Nevertheless, adoption rates remain low compared to other regions globally and vary considerably across MENA countries. This chapter sheds novel and much-needed light on a relatively understudied topic: the micro- and macroeconomic determinants for adopting MM systems in the MENA region. To do so, it summarizes the main findings from the existing theoretical and empirical literature, most of which have focused on African countries. This systematic literature review aims to assist researchers in designing future quantitative studies on MM.

Financial inclusion is an essential pre-condition for sustainable economic development and poverty alleviation. Sub-target 8.10 of the Sustainable Development Goal (SDG) of the United Nations (UN) emphasizes expanding “access to financial services like banking, insurance and financial services for all.” To take stock of countries’ progress in this sub-target, UN proposed using a set of three indicators: number of commercial bank branches and automated teller machine (ATM) per 100,000 adults (indicators 8.10.1 (a) and (b), respectively) and the proportion of adults with an account at a bank, other financial institution, or with a mobile-money service provider (indicator 8.10.2). This chapter examines these indicators and presents an assessment of whether they sufficiently capture the inclusiveness of a financial system as envisaged under SDG sub-target 8.10. Considering the existing literature on multidimensionality of financial inclusion, it is argued that this limited set of indicators are inadequate and methodologically insufficient. Additional indicators are proposed to augment the set. Further, a multidimensional Index of Financial Inclusion (IFI) is proposed as a measure of financial inclusion.