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GFDR 2014: Chapter 1

The Report

Chapter 1. Financial Inclusion: Importance, Key Facts, and Drivers

Key Messages

  • 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.

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