Fault Lines in Financial Inclusion

Abstract

Financial inclusion has been a global development policy priority over the last two decades. Financial inclusion involves providing access to basic financial services and the use of basic financial services to improve the welfare of individuals, households, and businesses. This article identifies the fault lines or vulnerabilities in the way financial inclusion is achieved. These fault lines or vulnerabilities arise from the overreliance on profit-oriented financial institutions to achieve financial inclusion, the multiple self-interest in the financial inclusion agenda, the unsustainability of policyinduced demand for basic financial services, the lack of safety net to protect poor banked adults from systemic risk events, and the prevalence of financial inclusionwashing that allow agents to misrepresent their support for financial inclusion. The article argued that the world needs to pay serious attention to these fault lines and seek solutions that promote financial inclusion in a sustainable way. The ideas in this article can help policymakers, academics, practitioners, and researchers in assessing the fault lines created by financial inclusion policies and strategies as this is the first step to finding solutions to address the fault lines.