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Financial inclusion: a strong critique

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  • Ozili, Peterson K

Abstract

This article presents some criticisms of financial inclusion. It notes that (i) financial inclusion is an invitation to live by finance and leads to the financialisation of poverty; (ii) some of the benefits of financial inclusion disappears after a few years; (iii) financial inclusion ignores how poverty affects financial decision making, (iv) it promotes digital money which is difficult to understand, (v) financial inclusion promotes the use of transaction accounts; (vi) digital money is difficult to understand; and that (vii) some financial inclusion efforts bear a resemblance to a campaign against having cash-in-hand. This study will help policymakers in their assessment of the economic, social, political and cultural factors that hinder financial inclusion as well as the consequence of financial inclusion for society. For academics, this study will provide a critical perspective to on-going financial inclusion debates in the large positivist literature on financial inclusion

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  • Ozili, Peterson K, 2020. "Financial inclusion: a strong critique," MPRA Paper 101813, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:101813
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    References listed on IDEAS

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    1. Allen, Franklin & Demirguc-Kunt, Asli & Klapper, Leora & Martinez Peria, Maria Soledad, 2016. "The foundations of financial inclusion: Understanding ownership and use of formal accounts," Journal of Financial Intermediation, Elsevier, vol. 27(C), pages 1-30.
    2. Markus K. Brunnermeier & Harold James & Jean-Pierre Landau, 2019. "The Digitalization of Money," Working Papers 2019-13, Princeton University. Economics Department..
    3. Demirguc-Kunt, Asli & Klapper, Leora & Singer, Dorothe, 2013. "Financial inclusion and legal discrimination against women : evidence from developing countries," Policy Research Working Paper Series 6416, The World Bank.
    4. Ms. Dalia S Hakura & Mr. Mumtaz Hussain & Ms. Monique Newiak & Mr. Vimal V Thakoor & Mr. Fan Yang, 2016. "Inequality, Gender Gaps and Economic Growth: Comparative Evidence for Sub-Saharan Africa," IMF Working Papers 2016/111, International Monetary Fund.
    5. Chauvet, Lisa & Jacolin, Luc, 2017. "Financial Inclusion, Bank Concentration, and Firm Performance," World Development, Elsevier, vol. 97(C), pages 1-13.
    6. Christian Gonzales & Sonali Jain-Chandra & Kalpana Kochhar & Monique Newiak & Tlek Zeinullayev, 2015. "Catalyst for Change; Empowering Women and Tackling Income Inequality," IMF Staff Discussion Notes 15/20, International Monetary Fund.
    7. Melanie Lührmann & Marta Serra-Garcia & Joachim Winter, 2018. "The Impact of Financial Education on Adolescents' Intertemporal Choices," American Economic Journal: Economic Policy, American Economic Association, vol. 10(3), pages 309-332, August.
    8. Ian Hathaway & Sameer Khatiwada, 2008. "Do financial education programs work?," Working Papers (Old Series) 0803, Federal Reserve Bank of Cleveland.
    9. Peterson K. Ozili, 2018. "Impact of digital finance on financial inclusion and stability," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(4), pages 329-340, December.
    10. Sharon Collard, 2007. "Toward Financial Inclusion in the UK: Progress and Challenges," Public Money & Management, Taylor & Francis Journals, vol. 27(1), pages 13-20, February.
    11. Philip Mader, 2018. "Contesting Financial Inclusion," Development and Change, International Institute of Social Studies, vol. 49(2), pages 461-483, March.
    12. Mandira Sarma, 2012. "Index of Financial Inclusion – A measure of financial sector inclusiveness," Competence Centre on Money, Trade, Finance and Development 1207, Hochschule fuer Technik und Wirtschaft, Berlin.
    13. Susanne Soederberg, 2013. "Universalising Financial Inclusion and the Securitisation of Development," Third World Quarterly, Taylor & Francis Journals, vol. 34(4), pages 593-612.
    14. Ozili, Peterson Kitakogelu, 2018. "Impact of Digital Finance on Financial Inclusion and Stability," MPRA Paper 84771, University Library of Munich, Germany.
    15. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2007. "Finance, inequality and the poor," Journal of Economic Growth, Springer, vol. 12(1), pages 27-49, March.
    16. Ozili, Peterson K, 2020. "Theories of financial inclusion," MPRA Paper 101810, University Library of Munich, Germany.
    17. Mr. Christian Gonzales & Ms. Sonali Jain-Chandra & Ms. Kalpana Kochhar & Ms. Monique Newiak & Mr. Tlek Zeinullayev, 2015. "Catalyst for Change: Empowering Women and Tackling Income Inequality," IMF Staff Discussion Notes 2015/020, International Monetary Fund.
    18. Derek D. Rucker & Adam D. Galinsky, 2008. "Desire to Acquire: Powerlessness and Compensatory Consumption," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 35(2), pages 257-267, April.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    : financial inclusion; criticism; poverty; digital money; digital finance; financial literacy; financial education.;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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