Financial Inclusion-Exclusion Paradox: How Banked Adults Become Unbanked Again

Financial Internet Quarterly, 2021

13 Pages Posted: 24 Jun 2021

Date Written: June 15, 2021

Abstract

This paper analyses how financially included adults might become unbanked again. Agents of financial inclusion incorporate economic and social constraints in the delivery of formal financial services. These constraints limit the ability of poor banked adults to use basic financial services to the fullest. The constraints affect agents of financial inclusion positively, and affect customers negatively up to a point where the marginal benefit of being financially included is negative for poor customers. When the marginal benefit of using formal financial services becomes negative, the affected banked adults may discontinue using their formal accounts or exit the formal financial sector when they can no longer bear the negative effect of social and economic constraints that hinder their ability to enjoy basic financial services to the fullest.

Keywords: Financial inclusion, financial institutions, financial exclusion, banked adults, formal accounts, paradox, access to finance, households, constraints

JEL Classification: G2, G21, O16

Suggested Citation

Ozili, Peterson K, Financial Inclusion-Exclusion Paradox: How Banked Adults Become Unbanked Again (June 15, 2021). Financial Internet Quarterly, 2021, Available at SSRN: https://ssrn.com/abstract=3867154

Peterson K Ozili (Contact Author)

Independent ( email )

Nigeria
Nigeria
Abuja
Nigeria

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