Financial Inclusion Essay

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Financial Inclusion for Individual
Promoting the use of financial services by individuals requires dealing with market failures, such as asymmetric information and moral hazard, that prevent the widespread use of financial products. Both private sector and government engagement is necessary to expand the financial inclusion of individuals. Technological progress, likely driven by the private sector and facilitated by the public sector, is expected to help increase the financial inclusion of individuals. This chapter reviews the roles of technology, product design, financial capability, financial education programs, consumer protection and market conduct, and government policies in fostering financial inclusion.

The roles of technology
This section was discussed about mobile banking and payments, innovative delivery channels, technologies for improved borrower identification and credit reporting, and adopting new technologies: the role of the market environment and competition. This section reviews the growth of mobile banking and payment systems and discusses technology-based business models and the role of improved borrower identification and credit reporting technologies in financial inclusion. This section also highlights that technology-based strategies for financial inclusion have varied substantially across countries and examines the features of national market environments that determine which technologies are best suited to enhance financial inclusion, as well as related to market structure and regulation that might make the success of some technology-based solutions difficult to replicate elsewhere. Major innovations in retail payment systems date back to the rise of card-based payment services. Credit cards became a wi...

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...rced. The information asymmetries between people who demand and who supply financial services can lead to adverse selection and moral hazard. The government can enhance financial inclusion by facilitating the access of banks to borrower information either by passing laws and regulation or by directly setting up public credit registries. The use of public funds is easy to justify in the interest of improving access and thereby promoting propoor growth. Several other direct intervention for financial inclusion have attracted attention in recent years which is government-to-person (G2P) payments, the use of state-owned banks, the use of government postal services for financial inclusion, and explicit financial inclusion strategies. Many countries have adopted formal national financial inclusion strategies and the financial inclusion strategy is led by the central bank.

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