Linking Financial Inclusion and Development

Abstract

Financial inclusion is the process that ensures access, usage and availability of the formal financial system to all members in an economy. The subject has been widely studied and several initiatives have been launched globally to promote financial inclusion to the population. Recognizing its importance to development, financial inclusion was also included in the UN’s Millennium Goals. An all-inclusive financial system allows families to organize their income and to plan future expenses; and on a macro level, it builds entrepreneurial spirit and drives job creation. It also allows governments greater visibility of the fiscal system, facilitating improved legality of transactions. As such, it can be argued that financial inclusion is linked to development - this dissertation aims to answer this question, by testing whether financial inclusion and development are correlated.