Financial Conclusion: Why Is Financial Inclusion Important?

1648 Words4 Pages
bulb-icon

Recommended: The role of government in promoting financial inclusion

Why is Financial Inclusion important? What are its benefits? The World Bank Global Financial Inclusion (Global Findex) Database indicates that 2.5 billion adults globally— which comes to about half the total adult population in the world—has zero access to financial services offered by regulated financial institutions. While in high-income economies, 89 percent of the adult respondents reported that they have an account in a formal financial organisation; the number comes down to only 41 percent in developing economies. Due to a lack of proper access, the poor people are forced to rely on unscrupulous moneylenders for credit at very high rates of interest; they use various assets such as livestock or gold etc., as a form of savings, so that …show more content…

At the end of the day, it is the women who are at the receiving end of the brunt of financial noninclusion in growing economies. Just 37% of women have formal account in contrast to 46% of men. Indeed, there is a palpable gender gap of 6 to 9 percentage across income clusters inside growing economies. Permitting easy and broad admission to financial services, without any price or non-price barriers to their use & presented in an accountable manner, have been shown to benefit the poor people and other various disadvantaged groups. The easy availability of capital will allow the poor people to recognize small business opportunities, with increase in flow on welfare effects, i.e., affecting the economy of the country. Financial inclusion has several direct advantages and benefits to poor families who have taken loans or are using savings to see them through difficult situations like health issues or they even make investments in household durable goods, education etc. Insurance, another financial product can help the poor manage risks as well. Various studies and researches have showed that financial inclusion promotes women empowerment. Studies and researches also show that economies with deeper financial inclusion have a tendency to grow faster and reduce

Show More
Related

  • Prosper Canada Advantages And Disadvantages

    357 Words  | 1 Pages

    Financial exclusion is the inability for citizens to access proper financial services: primarily services and products such as official saving bank accounts or credits cards. A broad range of disadvantages in the lives of these individuals, caused by the failure to have connections with these services, can consist of examples such as the inability to take out loans

    Read More

  • The Importance Of Financial Privilege

    195 Words  | 1 Pages

    Privilege can come in many forms. Financial privilege comes immediately to mind although this is a privilege that we should as a society strive to ensure in not a barrier to a worthy individual. This would be relatively straight forward to address given the privilege of a supportive environment is as important or more so than a financial privilege yet more difficult aspect in which to level the playing field. I consider myself privileged to have two parents that taught me the value of education as means to do good for the world. My parents, children and grandchildren of immigrants, grew up in poor circumstances but they had the privilege of parents who valued education. They strove to become engineers and used their education to make

    Read More

  • Financial Literacy Impacts Financial Decision Making

    1397 Words  | 3 Pages

    Ethical standards in the financial services industry were severely tested in light of news of outright fraud, Ponzi schemes, lack of regulatory oversight, and the likes in recent times. These gross violations, although shocking, are not a novelty especially when it comes to the money management business. But the sheer size, frequency and egregiousness of these recent scams and scandals highlight the lack of basic ethical standards in the industry with total disregard of their customer’s interests. A study by the National Bureau of Economic Research found that many investment managers facilitate and support harmful behavior because it’s in their best interest to do so. With commissions being their sole motivation, the “advisors” or brokers to be more precise, encourage bad investing behavior like frequent trading and choosing more expensive funds that provide kickbacks to the investment manager. And then you have this entire army of insurance agents masquerading as investment advisors, routinely promoting and selling financial products to unsuspecting consumers that harm not only the people they are selling the products to but the integrity of the entire financial services sector, with severe long-term implications of capital accessibility for the entire economy. A Registered Investment Advisor (RIA), on the other hand, is required to act as a fiduciary under the Securities Act of the 1940. The fiduciary standard requires an RIA to put the interest of the clients he or she serves above their own and to declare any conflicts of interests that may arise. Brokers and other money managers can hide behind a very loosy-goosy suitability standard and are required to only recommend investments that are “suitable” to their clie...

    Read More

  • The Importance of Financial Literacy

    631 Words  | 2 Pages

    Making improvements on our financial literacy results in a wave of impacts on our economy and the financial health in our society because of responisble behiavior with our finances. These modifications to our behavior are neccesary because it let's us address primary cultural problems, for example over-credits on your purchases, mortgages possibly resulting in debt, dealing with expectations on inflation and also planning on your retirement.

    Read More

  • Financial Literacy Argumentative Essay

    717 Words  | 2 Pages

    Numerous amounts of people have financial problems when they get out of high school, so what should the school board do? In 2007, thirty-four out of fifty states have personal finance courses in their curriculum (Bernard 4). A financial literacy course seems to be what a majority of states are doing. Financial literacy courses have their pros and their cons just like everything else. Financial literacy courses bring up some very important questions.

    Read More

  • Domination And The Arts Of Resistance: Hidden Transcripts Analysis

    1101 Words  | 3 Pages

    Thus suggesting that women would normally pass their loans that they get on to their male relatives or husbands. On the outside it seems like the women are getting what they need, but society does not see the hidden agenda, that most of the loans and shares are being passed on to the males in their household. This power is being hidden from the public and is not straightforward. In some cases most women join the bank as part of the programme (bank workers). This seems to show the public that the women of the villages own the bank (public transcript) however the hidden transcripts suggest that they do not understand what it means, hence they do not acquire dividends from the shares that they bought.

    Read More

  • Micro Penetration Index Analysis

    649 Words  | 2 Pages

    The intensity of penetration of microfinance (MPI) has been computed by dividing the share of the state in microfinance clients by share of population. Intensity of penetration of microfinance among poor (MPPI) has been derived by dividing the share of the state in microfinance clients by share of population. Since the microfinance clients are in the numerator, a value of more than 1 indicates that clients acquired are more than proportional to the population. Higher the score, i.e. more than 1, the better is the performance. Lower the score from 1 which is the par value, poorer is the performance on the state

    Read More

  • Microcredit

    1743 Words  | 4 Pages

    Microcredit can be defined as small loans, or microloans, for people around the world in extreme poverty to help spur entrepreneurship. The issue of microcredit is extremely important in the world’s economy. Poverty alleviation and economic development are the primary goals of microcredit programs, that is why they began in the developing countries of Asia and Latin America, economist Muhammad Yunus and his Grameen Bank in Bangladesh are credited of pioneering this financial innovation (Smith, Thurman, 2007). After acquiring a loan, impoverished people get involved in self-employment projects that help them to start a business and begin generating income and in many cases leave poverty. Microcredit offers loans to poor people without requesting any financial history from them. These loans help to improve the quality of life of individuals and communities through commitment. In recent years, the idea of giving small loans to poor people became the darling of the development world, giving a way to propel even the poorest people into better lives (Jolis, 2011).

    Read More

  • Gender Barriers Essay

    1188 Words  | 3 Pages

    This decreases the economy of their country. Along with decreasing the potential these women have to progress in their field of work and well being. Although not many women do choose to join the labour force, which explains the large gender gap among entrepreneur, farmers, and employees alike. The participation of women working has declined even from 57 to 55 percent globally and has stayed around 25 percent in the middle East and North Africa. When women do choose to join the labour force they farm less, produce less productive plots, own smaller businesses that create fewer jobs, work in less profitable sectors, and face discriminatory laws and norms that constrain their time and choices. Discriminatory laws affect women 's ability to own or inherit property, open a bank account, or access the technology, credit, or fertilizer required to progress more profitable businesses or manage more productive farms. Even if women are given the opportunity to have the same job as a man she still wouldn’t receive the same income as him, the ILO found that in 83 countries women earned on average 10-30 percent less than men. Another opportunity women are missing out on is bank account ownership, in 2011, 47 percent of women owned a bank account compared to 54 percent of men; in 2014, the gap between women and men only increased, 58 percent of women had an

    Read More

  • Case Study Of Mobile Banking

    1583 Words  | 4 Pages

    The banking sector continues to play pivotal roles in the growth of the world’s economy (World Bank, 2008). Their services include clearing and settlement systems to facilitate trade, channelling financial resources between savers and borrowers, and various products to deal with risk and uncertainty (Bollard, 2011). Governments, international financial firms and donors across the world have continually acknowledged that access to financial services can play a key role in poverty alleviation and reducing hopelessness of poor people (World Land Trust, 2013). Despite the efforts of the World Bank and other financial institutions to expand the financial inclusion of all especially the poor, estimated 4 billion people

    Read More

  • Russian Financial System Falling Behind

    2871 Words  | 6 Pages

    Currently, financial system is central to the development and successful market economy and a necessary condition for growth and stability of ...

    Read More

  • Literature Review: Financial Stability

    1411 Words  | 3 Pages

    In particular, low-income people may have a lack of awareness about or distrust in banks and other financial institutions (Birkenmaier and Curley 2009). Therefore, communicating to them the advantages of using traditional banking versus using alternative banking services may help them to understand how to more effectively meet their banking needs (Robbins, 2013). Since many low income persons live paycheck to paycheck, acquiring a checking account could be an investment towards financial stability. Nearly 10 million households in the United States are unbanked and low income and minority families are disproportionately among the unbanked (U.S Department of the Treasury, 2008). Additionally, low-income families usually pay more for minimum financial services and have poor credit history, which prevents them from being able to rent affordable decent housing, or buying a reliable car on credit (Robbins, 2013; Jacob, 2000; Valley of Sun United Way,

    Read More

  • Essay On Agriculture Credit

    2385 Words  | 5 Pages

    With the dismal picture of state-owned rural finance organizations, micro-finance nongovernmental institutions are growing to meet the credit needs of small producers in many countries. Reports indicate that they now meet the credit demand of 8-10 million people in Africa, Asia, and Latin America.4 Many of these organizations are subsidized not for high loan default costs but for higher transaction costs associated with group-based lending and other social intermediation cost...

    Read More

  • Financial Inclusion Essay

    1422 Words  | 3 Pages

    Promoting the use of financial services by individuals requires dealing with market failures, such as asymmetric information and moral hazard, that prevent the widespread use of financial products. Both private sector and government engagement is necessary to expand the financial inclusion of individuals. Technological progress, likely driven by the private sector and facilitated by the public sector, is expected to help increase the financial inclusion of individuals. This chapter reviews the roles of technology, product design, financial capability, financial education programs, consumer protection and market conduct, and government policies in fostering financial inclusion.

    Read More

  • The Financial Service Sector

    1287 Words  | 3 Pages

    Banks have played a very important part in giving the country its shape by providing a variety of different services to the customers. The customers are now able to take financing from the banks depending upon their choice of work, nature of the thing that they want to acquire o...

    Read More

More about Financial Conclusion: Why Is Financial Inclusion Important?

Open Document