Financial Inclusion and Stability : What Does Research Show?

A growing body of research suggests that whether broad-based access to formal financial services promotes financial stability depends on how that access is managed within the regulatory and supervisory framework, especially in terms of financial integrity and consumer protection. Four factors come into play: financial inclusion, financial consumer protection, financial integrity, and financial stability. These factors are inter-related and, under the right conditions, positively related. Yet failings on one dimension are likely to lead to problems on others. This brief explores what research to date shows about the linkages and potential beneficial relationships among these factors, and it identifies gaps that remain to be explored. There is limited empirical work exploring the specific linkages between financial inclusion and financial stability. Studies have focused largely on the impact of financial development on growth, income inequality, and poverty reduction. The evidence strongly indicates that, when effectively regulated and supervised, financial development spurs economic growth, reduces income inequality, and helps lift households out of poverty.

Bibliographic Details

Main Authors:	Cull, Robert, Aslı Demirgüç-Kunt, Lyman, Timothy
Language:	English
Published:	Washington, DC: World Bank 2012-05
Subjects:	ACCESS TO CREDIT, ACCESS TO FINANCE, ADVERSE EFFECTS, ALLOCATION OF CAPITAL, ANTI-MONEY LAUNDERING, BAD BANKS, BANK BRANCH, BANK POLICY, BANKING SUPERVISION, BANKING SYSTEM, BANKS, BARRIER, CAPITALIZATION, COLLEGE DEGREE, COMMERCIAL BANKING, CONSUMER PROTECTION, CORRUPTION, COUNTRY LEVEL, DEBT, DEREGULATION, DEVELOPING COUNTRIES, DEVELOPMENT BANK, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DIVERSIFICATION, DOMESTIC SAVINGS, ECONOMIC GROWTH, ECONOMIC IMPACT, ECONOMICS, EDUCATIONAL ATTAINMENT, EMERGING MARKETS, EMPIRICAL STUDIES, EMPIRICAL WORK, ENTREPRENEURSHIP, FINANCIAL ACCESS, FINANCIAL ASSETS, FINANCIAL CONSTRAINTS, FINANCIAL CRISIS, FINANCIAL DEPTH, FINANCIAL DEVELOPMENT, FINANCIAL EXCLUSION, FINANCIAL INFRASTRUCTURE, FINANCIAL INTERMEDIATION, FINANCIAL LIBERALIZATION, FINANCIAL LITERACY, FINANCIAL MANAGEMENT, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL SECTOR POLICIES, FINANCIAL SECTOR REGULATION, FINANCIAL SECTORS, FINANCIAL STABILITY, FINANCIAL SYSTEM, FINANCIAL SYSTEM STABILITY, FINANCIAL SYSTEMS, FINANCIAL TOOLS, FINANCING OBSTACLES, FIRM GROWTH, FORMAL FINANCIAL SERVICES, GINI COEFFICIENT, GLOBAL STANDARD, GROWTH RATES, HOUSEHOLDS, INCOME, INCOME DIFFERENTIALS, INCOME DISTRIBUTION, INCOME INEQUALITY, INCOME SHARE, INCOMES, INEQUALITY, INFORMAL SAVINGS, INSURANCE, INVESTMENT OPPORTUNITIES, LABOR MARKETS, LACK OF KNOWLEDGE, LEGAL CONSTRAINTS, LONG RUN, MANDATES, MARKET STABILITY, MICROFINANCE, OPPORTUNITY COSTS, POLICY ISSUES, POLICY MAKERS, POLICY RESEARCH, POLITICAL STABILITY, PORTFOLIOS, POVERTY ALLEVIATION, POVERTY LINE, POVERTY REDUCTION, PRIVATE SECTOR DEVELOPMENT, PRO-POOR, REGULATORS, RELATIVE WAGE, RESERVE, RESERVE BANK, RESERVE BANK OF INDIA, RURAL BANKS, SAVINGS, SAVINGS PRODUCTS, SMALL BUSINESS, SMALL LOANS, SMALL SAVERS, SOCIAL BANKING, STABLE ECONOMY, STABLE SOCIETY, SUPERVISORY FRAMEWORK, SYSTEMIC RISK, UNDERDEVELOPED FINANCIAL SYSTEMS, UNSECURED DEBT, WAGE RATES, WHITE PAPER,
Online Access:	http://documents.worldbank.org/curated/en/2012/05/16542131/financial-inclusion-stability-research-show https://hdl.handle.net/10986/9443
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