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Can financial inclusion and financial stability go hand in hand?

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  • M J Roa Garcia

Abstract

This study addresses the relation between financial inclusion and financial stability. In order to do so, we review studies on the diverse possible links between these two financial phenomena for developing countries. Although some results are still preliminary, from the reviewed studies we can draw some conclusions. First, risk may rise from rapid credit growth associated with new financial inclusion institutions and instruments, and from unregulated parts of the financial system. However, broader access to deposits that leads to a more diversified base of deposits, could improve significantly the resilience of the overall financial system and thus financial stability. A further conclusion is that it is important to specify what type of state intervention or regulation is necessary in the particular case of financial inclusion. The application of standards and other measures that guarantee financial stability might prove to be a setback to inclusion processes.

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  • M J Roa Garcia, 2016. "Can financial inclusion and financial stability go hand in hand?," Economic Issues Journal Articles, Economic Issues, vol. 21(2), pages 81-103, September.
    • Handle: RePEc:eis:articl:216garcia
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    1. Ana María Iregui-Bohórquez & Ligia Alba Melo-Becerra & María Teresa Ramírez-Giraldo & Ana María Tribín-Uribe, 2018. "Formal and Informal Household Credit in Colombia," Investigación Conjunta-Joint Research, in: María José Roa García & Diana Mejía (ed.), Financial Decisions of Households and Financial Inclusion: Evidence for Latin America and the Caribbean, edition 1, volume 1, chapter 5, pages 125-156, Centro de Estudios Monetarios Latinoamericanos, CEMLA.
    2. Juan Sebastian Cubillos-Rocha & Juliana Gamboa-Arbelaez & Luis Fernando Melo-Velandia & Sara Restrepo-Tamayo & Maria Jose Roa-Garcia & Mauricio Villamizar-Villegas, 2021. "Effects of interest rate caps on credit access," Journal of Regulatory Economics, Springer, vol. 60(2), pages 117-139, December.
    3. Ana María Iregui-Bohórquez & Ligia Alba Melo-Becerra & María Teresa Ramírez-Giraldo & Ana María Tribín-Uribe, 2018. "Crédito formal e informal de los hogares en Colombia," Investigación Conjunta-Joint Research, in: María José Roa García & Diana Mejía (ed.), Decisiones financieras de los hogares e inclusión financiera: evidencia para América Latina y el Caribe, edition 1, volume 1, chapter 5, pages 133-166, Centro de Estudios Monetarios Latinoamericanos, CEMLA.

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