Fintech, financial inclusion and income inequality: A quantile regression approach

Although theory suggests that financial market imperfections – mainly information asymmetries, market segmentation and transaction costs – prevent poor people from escaping poverty by limiting their access to formal financial services, new financial technologies (FinTech) are seen as key enablers of financial inclusion. Indeed, the UN 2030 Agenda for Sustainable Development (UN-2030-ASD) and the G20 High-Level Principles for Digital Financial Inclusion (G20-HLP-DFI) highlight the importance of harnessing the potential of FinTech to reduce financial exclusion and income inequality. This paper investigates the interrelationship between FinTech, financial inclusion and income inequality for a panel of 140 countries using the Global Findex waves of survey data for 2011, 2014 and 2017. We posit that FinTech affects inequality directly and indirectly through financial inclusion. We invoke quantile regression analysis to investigate whether such effects differ across countries with different levels of income inequality. We uncover new evidence that financial inclusion is a key channel through which FinTech reduces income inequality. We also find that while financial inclusion significantly reduces inequality at all quantiles of the inequality distribution, these effects are primarily associated with higher-income countries. Overall, our results support the aspirations of the UN-2030-ASD and G20-HLP-DFI

‘Taking the Bank to the Youth’: Impacts on Savings from the Ghana YouthSave Experiment

This paper explores experimental impacts of in-school banking and marketing outreach on the savings performance of youth in Ghana. Findings suggest that youth in treatment schools performed better than those in control schools in terms of account opening, depositing and savings. Between the two treatment conditions, in-school banking was more effective than marketing outreach in promoting savings. These findings demonstrate that a meaningful proportion of low-income youth, in a resource-limited country, can be connected to formal financial services and save if access and opportunities are available. The results support the offering of financial services at schools as a strategy to expand youth financial inclusion

Financial inclusion at scale : an IDRC-Alliance for Financial Inclusion (AFI) partnership - final report

This first-of-a-kind regional financial inclusion platform in the Latin America and Caribbean (LAC) region leveraged collective expertise and learnings of financial policymakers, regulators and knowledge partners. The Alliance for Financial Inclusion (AFI) has enabled policy and regulatory innovation and incorporates gender inclusive financing as a priority in the design and implementation of financial inclusion policies. This report summarizes activities, contributions and achievements of the project. The Financial Inclusion Initiative in Latin America and the Caribbean (FILAC) developed and implemented 41 policy and regulatory changes in nine countries, attributing 50% of all financial inclusion policy changes to their engagement in AFI