The Role of the G20 in Enhancing Financial Inclusion

 Roy Culpeper. Courtesy of the North-South Institute.

Research has shown that greater access to finance is crucial to reducing poverty and inequality. Yet most households and firms in developing countries are excluded from access to financial services. The G20’s initiative on enhancing financial inclusion thus recognizes a long-neglected problem, particularly in developing countries. It also identifies a number of policy prescriptions to make financial services more accessible to the great majority of households and firms. These rely primarily on improving the financial infrastructure and building the capacity of existing service providers, principally microfinance institutions (MFIs) and commercial banks. However, by themselves these prescriptions are insufficient and will not succeed in meeting their objectives. More inclusive finance will also require a more active role by government agencies and programs to complement the efforts of MFIs and private banks. It will additionally require innovative ideas and policies to ensure that small and medium enterprises, which tend to be significantly underserved by financial markets, obtain greater access to credit and other financial services.

Click here to read The Role of the G20 in Enhancing Financial Inclusion (22 pages, pdf, 548KB)

Roy Culpeper is Senior Fellow at the School of International Development and Global Studies at the University of Ottawa.