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Optimal financial inclusion

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  • Ozili, Peterson K

Abstract

This article reports the conditions for optimality in financial inclusion. The optimal level of financial inclusion is achieved when basic financial services are provided to members of the population at a price that is affordable and that price is also economically sufficient to encourage providers of financial services to provide such financial services on a continual basis. Any level of financial inclusion that does not meet these conditions is sub-optimal. The consequence of sub-optimal levels of financial inclusion are reported and I show that maintaining a sub-optimal level of financial inclusion – which is common in many countries – is incentive-inefficient both for users and suppliers of basic financial services.

Suggested Citation

  • Ozili, Peterson K, 2020. "Optimal financial inclusion," MPRA Paper 101808, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:101808
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    References listed on IDEAS

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    15. Isabelle Guérin & Jean-Michel Servet & Dominique Labie, 2015. "The crises of microcredit," Post-Print halshs-02913573, HAL.
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    Cited by:

    1. Abramova Iryna & Nedilska Larysa & Kurovska Nataliia & Martynyuk Halyna, 2021. "Financial Inclusion in the Context of Sustainable Development of Rural Areas," Management Theory and Studies for Rural Business and Infrastructure Development, Sciendo, vol. 43(3), pages 328-336, September.

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    More about this item

    Keywords

    financial inclusion; optimal financial inclusion; excluded population; demand-side financial inclusion; supply-side financial inclusion.;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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