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On harnessing the potential of financial inclusion

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  • Peter Dittus
  • Michael Klein

Abstract

The development of information and communications technology is opening up the opportunity for providing essential financial services to most people. Indeed, many mobile money or branchless banking schemes are currently spreading across the world. However, these schemes can only be sustainable if they are built on a commercially viable business model. In this respect, the verdict is still out. The paper describes one commercially viable initiative in more detail, M-PESA in Kenya, and analyses in detail the transactions involved. It argues that in order to harness the potential of financial inclusion it is vital to permit experimentation with different business models. Required therefore is regulation that enables such experimentation by calibrating it to the type of service offered, and is tightened if and when such schemes become bigger with the potential to impact the financial stability: risk-proportionate regulation by service type.

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  • Peter Dittus & Michael Klein, 2011. "On harnessing the potential of financial inclusion," BIS Working Papers 347, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:347
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-472, May.
    2. Claire Alexandre & Ignacio Mas & Daniel Radcliffe, 2011. "Regulating New Banking Models to Bring Financial Services to All," Challenge, Taylor & Francis Journals, vol. 54(3), pages 116-134.
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    Cited by:

    1. Ozili, Peterson K, 2023. "Financial inclusion, sustainability and sustainable development," MPRA Paper 118880, University Library of Munich, Germany.
    2. Sanderson Abel & Learnmore Mutandwa & Pierre Le Roux, 2018. "A Review of Determinants of Financial Inclusion," International Journal of Economics and Financial Issues, Econjournals, vol. 8(3), pages 1-8.
    3. Aaron Mehrotra & James Yetman, 2015. "Financial inclusion - issues for central banks," BIS Quarterly Review, Bank for International Settlements, March.
    4. Mr. Tanai Khiaonarong, 2014. "Oversight Issues in Mobile Payments," IMF Working Papers 2014/123, International Monetary Fund.
    5. Wagner, Charlotte & Winkler, Adalbert, 2013. "The Vulnerability of Microfinance to Financial Turmoil – Evidence from the Global Financial Crisis," World Development, Elsevier, vol. 51(C), pages 71-90.
    6. López, Tania & Winkler, Adalbert, 2019. "Does financial inclusion mitigate credit boom-bust cycles?," Journal of Financial Stability, Elsevier, vol. 43(C), pages 116-129.
    7. Arias, Daniela., 2015. "Financial inclusion policy in Ecuador : roles of the Central Bank towards economic and job creation," ILO Working Papers 994874763402676, International Labour Organization.
    8. Dante B Canlas & Johnny Noe E Ravalo & Eli M Remolona, 2018. "Do small bank deposits run more than large ones? Three event studies of contagion and financial inclusion," BIS Working Papers 724, Bank for International Settlements.
    9. de Koker, Louis & Jentzsch, Nicola, 2013. "Financial Inclusion and Financial Integrity: Aligned Incentives?," World Development, Elsevier, vol. 44(C), pages 267-280.
    10. Qifeng Zhang & Josephine B. Valle-Sison, 2014. "Financial inclusion and regulatory implications," Chapters, in: Iwan J. Azis & Hyun S. Shin (ed.), Global Shock, Risks, and Asian Financial Reform, chapter 15, pages 600-627, Edward Elgar Publishing.
    11. Morten Linnemann Bech & Umar Faruqui & Frederik Ougaard & Cristina Picillo, 2018. "Payments are a-changin' but cash still rules," BIS Quarterly Review, Bank for International Settlements, March.
    12. Fadi Hassan Shihadeh & Azzam (M T) Hannon & Xiu Hua Wang, 2017. "The Financial Inclusion Development in Palestine," Business and Economic Research, Macrothink Institute, vol. 7(1), pages 189-198, June.
    13. Evans, Olaniyi, 2016. "Determinants of Financial Inclusion in Africa: A Dynamic Panel Data Approach," MPRA Paper 81326, University Library of Munich, Germany.
    14. repec:ilo:ilowps:487476 is not listed on IDEAS
    15. Arbolino, Roberta & Carlucci, Fabio & Cirà, Andrea & Yigitcanlar, Tan & Ioppolo, Giuseppe, 2018. "Mitigating regional disparities through microfinancing: An analysis of microcredit as a sustainability tool for territorial development in Italy," Land Use Policy, Elsevier, vol. 70(C), pages 281-288.
    16. Ahmed,Habib & Mohieldin,Mahmoud & Verbeek,Jos & Aboulmagd,Farida Wael, 2015. "On the sustainable development goals and the role of Islamic finance," Policy Research Working Paper Series 7266, The World Bank.
    17. Penelope Hawkins, 2011. "Financial access: what has the crisis changed?," BIS Papers chapters, in: Bank for International Settlements (ed.), Central banking in Africa: prospects in a changing world, volume 56, pages 11-20, Bank for International Settlements.
    18. Guo, Xiuping & Wang, Luting & Meng, Xianglei & Dong, Xintong & Gu, Lili, 2023. "The impact of digital inclusive finance on farmers' income level: evidence from China's major grain production regions," Finance Research Letters, Elsevier, vol. 58(PC).

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    Keywords

    financial intermediaries; payments; regulation;
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