Inclusion inspires global financial agenda but how does it fare in the small Pacific island economies? The case of Vanuatu

The objective of this study is to fill a gap in the expanding literature on country-specific, regional and global financial inclusion. This is the first study in which the issue of inclusion in the context of the Pacific island economies is systematically investigated. Using Vanuatu as a case, and recently available demand side survey data provided by the country’s central bank, the results of the study indicate that exclusion is mainly voluntary. Determinants, motivations, and barriers of financial inclusion in Vanuatu are discussed using a range of controls. The use of a formal bank account is more popular in Port Vila and Luganville compared to other regions of the country. Higher income, better education and age are positively associated with greater use of formal accounts. Women are more likely to have general savings and formal credit compared to men. However, regardless of the ownership of a bank account, women are more likely to report savings over the past 12 months, and make deposits and withdrawals from their bank accounts more frequently. Policy implications are discussed.