Financial Empowerment as a Response to Social Exclusion in Canada

Abstract

Although Canada has achieved relatively strong levels of social and economic equity, some indicators point to a decline in equity during the 1990s and 2000s. The changing role of the state helps to explain this change as does the process of financialization. Financialization – the growth in the demand and supply of financial products – has had an important effect on vulnerable Canadians. In some cases the effect has been harmful and as a result the state, the business sector, and civil society have responded to address this harm. The approach taken by Financial Institutions (FIs, most notably banks and credit unions) and civil society organizations (CSOs), however, are sometimes in tension. The efforts of banks are based on the assumption that the consumer makes mistakes and requires more knowledge. CSOs, on the other hand, focus more on structural constraints. This paper explores these different responses and argues that a more coherent and holistic response, aligned with the needs of vulnerable Canadians would serve all stakeholders better than the current approach. The paper first explores the social and economic context in Canada over the last twenty years and the phenomenon of financial exclusion.

Keywords: Financial Empowerment, Social and Economic Inequality, Financial Exclusion, Payday Lending, Micro-Credit, Asset Building, Financial Literacy