Optimal financial inclusion

Ozili, Peterson K (2020): Optimal financial inclusion. Forthcoming in:

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: financial inclusion, optimal financial inclusion, excluded population, demand-side financial inclusion, supply-side financial inclusion.
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O50 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis

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