Introduction: financial inclusion - an overview of key issues

There are many reasons why financial inclusion is important in a country: it has implications for economic development and the economy and society more generally, it often requires public policy initiatives, and it may impact on the efficiency, structure and stability of the national financial system. Financial inclusion is multi-dimensional in several respects inter alia: the precise nature of financial inclusion, the range and types of barriers to inclusion and the distinction between supply and demand pressures, the degree of exclusion at different points along the spectrum of financial services and products, the distinction to be made between exclusion and usage, and the positive and negative impacts of new technology. The costs of financial exclusion relate to economic development, individuals, and governments. This chapter suggests a functional approach to financial inclusion where the focus is on the basic and universal functions of the financial system and the extent to which different groups are excluded from particular functions.