Vulnerable Group Theory of Financial Inclusion

Abstract

In this article, I propose the vulnerable group theory of financial inclusion. The theory begins with the premise that vulnerable people are often left behind in society, they suffer the most from economic hardship and crises, and they are at risk of being excluded from the formal financial sector. The theory therefore proposes that financial inclusion efforts should be targeted at all vulnerable people and groups in society. Bringing vulnerable people into the formal financial sector will give them access to available formal financial services, which they can use to earn income and acquire assets that they can use to take themselves out of the vulnerability bracket. The study also identifies the vulnerable groups in need of financial inclusion and proposes a vulnerability grid. Several avenues to expand the theory are suggested.