Financial inclusion and the chasm of poverty and exclusion

Abstract

In the face of acute poverty, financial inclusion is still a topical issue. It aims to lift the poor out of the abyss of exclusion and marginalization.

Financial inclusion refers to the proportion of individuals or organizations accessing a range of financial services such as savings, credit, payment instruments and insurance (WB 2015).

Thus, financial inclusion appears to be a universal strategy for fighting poverty. This article explores the historical and theoretical contours of financial inclusion through a review of the literature. With a real antiquity, through the pawnshop, financial inclusion has been strengthened over the years in its performance to become widespread in all parts of the world. It has been adopted as an inclusive strategy to fight poverty by providing access to a range of financial services.

Even though its purpose is to give the poor the possibility of integrating finance, two approaches with contradictory appearances have come together to feed the theoretical reflection. The most salient elements of their opposition are the quest for rationality and the search for broad social outreach.

However, although seemingly contradictory, these approaches converge, while complementing each other, on three determinants that underpin the performance of financial inclusion.

These are affordability, use of financial services and quality.

These three determinants are discussed in the literature as the foundations of the performance of financial inclusion strategies.

As such, they are analyzed in different contexts to determine proven methodologies for their implementation.

Keywords: Financial inclusion; Poverty; Approach

Classification JEL: G20, G21

Paper type: Theoretical Research