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On Harnessing the Potential of Financial Inclusion

Peter Dittus

Bank for International Settlements (BIS)

Michael U. Klein

Frankfurt School of Finance and Management

May 1, 2011

BIS Working Paper No. 347

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 jury 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. Regulation is therefore required that enables such experimentation by being calibrated to the type of service offered, but which can be tightened if and when such schemes become bigger with the potential to impact financial stability: risk-proportionate regulation by service type.

Number of Pages in PDF File: 25

Keywords: financial intermediaries, payments, regulation

JEL Classification: G210, G280

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Date posted: June 8, 2011 ; Last revised: May 15, 2014

Suggested Citation

Dittus, Peter and Klein, Michael U., On Harnessing the Potential of Financial Inclusion (May 1, 2011). BIS Working Paper No. 347. Available at SSRN: http://ssrn.com/abstract=1859412 or http://dx.doi.org/10.2139/ssrn.1859412

Contact Information

Peter Dittus (Contact Author)
Bank for International Settlements (BIS) ( email )
CH-4002 Basel, Basel-Stadt
41 61 280 9249 (Phone)
41 61 280 9100 (Fax)
Michael U. Klein
Frankfurt School of Finance and Management ( email )
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References:  29
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