The Nexus of Financial Inclusion and Financial Stability: A Study of Trade-Offs and Synergies

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

The Interplay of Financial Education, Financial Literacy, Financial Inclusion and Financial, Stability: Any Lessons for the Current Big Tech Era?

“…The findings of Sahay et al (2015) are supported by Čihák, Mare and Melecky (2016), who study the trade-offs and synergies between financial inclusion and financial stability. They conclude that extending financial inclusion may result in both less and more financial stability, depending on the country characteristics.…”

“…In this paper, we follow the OECD (2013) and define financial literacy as a people's level of knowledge and skills as well as their attitudes and preferences regarding financial concepts and the use of financial services. 5 Our definition of financial inclusion is inspired by Čihák, Mare and Melecky (2016) and includes the degree of both access to and use of formal financial services by households and firms. 6 When studying financial education, we also follow the OECD (2005) and consider all of the activities 7 that aim to improve people's financial knowledge, skills and behaviours.…”

Barriers to Formal Saving: Micro‐ and Macroeconomic Effects

“…A measure of the linear interdependence between stability and inclusion at different levels of aggregation is made in Čihák and Melecky (), who focus on volatility, the capacity for resistance, and banking crises. Financial inclusion is mainly gauged using different measures of saving.…”

A Review on the Recent Trends in Financial Inclusion: The Research Journey So Far

“…World Bank has recognized financial inclusion as an effective tool for poverty mitigation and target financial access to all segments of the population. Through Maya Declaration and Global Partnership for Financial Inclusion, G20 economies acknowledge financial inclusion as one of the key pillars of poverty alleviation and economic development and commit themselves for promoting financial inclusion (Cihak et al, 2016). At least for the last two decades, World Bank has widely invested in developmental economics research emphasizing the financial inclusion for poverty reduction and for promoting economic welfare, especially in developing economies.…”