Chapter 1. Financial Inclusion: Importance, Key Facts, and Drivers
Financial inclusion—the proportion of individuals and firms that use financial services— varies widely across the world.
More than 2.5 billion adults—about half of the world’s adult population—do not have a bank account. While some of these people exhibit no demand for accounts, most are excluded because of barriers such as cost, travel distance, and amount of paperwork.
Enterprise surveys in 137 countries find that only 34 percent of firms in developing economies have a bank loan, whereas the share is 51 percent in developed economies. In developing economies, 35 percent of small firms identify finance as a major constraint, while only 16 percent in developed economies do so.
Research—both theoretical and empirical—suggests that financial inclusion is important for development and poverty reduction. For the poor,the evidence is especially strong on access to basic, no-frills savings and payments accounts; it is much weaker on access to credit. For firms, especially for small and medium enterprises and new entrepreneurs, improving access to credit is likely to have significant growth benefits.
If inclusion is to have positive effects, it needs to be promoted responsibly. Financial inclusion does not mean credit for all at all costs.
A diverse and competitive financial sector—one that includes different types of financial providers and financial markets—is helpful in supplying the range of products and services necessary for healthy financial inclusion.