This chapter delivers an empirically informed critical engagement with financial inclusion. It questions whether or not access to financial services constitutes an urgent universal human need, and probes for evidence regarding the potential benefits and harms of financial inclusion. The authors discuss different approaches to understanding and defining financial inclusion, and then look at the history of microfinance, the intervention at the heart of financial inclusion efforts in developing countries. The authors then examine the empirical evidence for and against poverty impacts and women’s empowerment resulting from financial inclusion, which they find is inconclusive, and they find even weaker evidence and logic for financial inclusion driving macroeconomic development. Discussing the broader politics of financial inclusion, the authors highlight how it is implicated in a broader financialization of development, which inserts market logics into non-market spaces and enables new forms of accumulation, without necessarily producing developmental impacts. They warn about the emerging connection of financial inclusion activities with behaviourist thinking, which might blame poor people for being (or staying) poor. In conclusion, the value of financial inclusion, as an intervention governed by the unequal rules and power relations of financial systems, remains ambiguous.
Philip Mader and Solène Morvant-Roux
Isabelle Guérin, Solène Morvant-Roux and Jean-Michel Servet
Microfinance, both as a field of action and research, has been through major changes over the past decade. This field of action is now part of the broader financial inclusion agenda, and digital finance is taking on an increasingly important position. New technologies are continuing to expand the current and potential frontiers of ‘financial inclusion’. In terms of research, some innovative (though disputable) methods have emerged, with varying scopes and objectives. Both are quantitative: financial diaries and randomized control trials (RCTs). These methods have resulted in some progress (financial diaries in particular). But they tend to considerably narrow down the unit of analysis (especially RCTs, which are closely linked to behaviourism) while crowding out other methods and approaches (Bedecarrats et al. 2017). The main purpose of this chapter is to argue that to design suitable, fair financial services, we must take social interdependencies into account. By this, we mean that humans are first and foremost social beings constantly looking to forge relations with others. We also mean that social and economic changes are not the aggregate of individual actions but of multiple interactions and systemic effects.