Social Inclusion and Financial Inclusion: International Evidence

Abstract

This paper investigates the association between social inclusion and financial inclusion. Social inclusion and financial inclusion are two major development policy agenda in many countries, and the association between them has received little attention in the policy and academic literature. Using correlation analysis, the findings reveal a positive and significant correlation between social inclusion and financial inclusion for Asian countries, Middle Eastern countries and African countries while the correlation between social inclusion and financial inclusion is negative for European countries. The findings also show that European and Asian economies experience higher levels of social inclusion and account ownership in a formal financial institution while African countries and Middle Eastern countries experience lower levels of social inclusion and account ownership. The implication of the findings is that some socially inclusive societies tend to enjoy greater financial inclusion while other socially inclusive societies may experience lower financial inclusion. The study provides insights for researchers, decision makers, and practitioners to understand the association between financial and social inclusion.

Keywords: financial inclusion, social inclusion, sustainability, access to finance, account ownership

JEL Classification: G00, G21, O16