FINANCIAL STABILITY AND FINANCIAL INCLUSION: THE CASE OF SME LENDING

2018 ◽  
Vol 63 (01) ◽  
pp. 111-124 ◽  
Author(s):  
PETER J. MORGAN ◽  
VICTOR PONTINES
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Financial Stability ◽  
Developing Economies ◽  
Empirical Studies ◽  
Bank Lending ◽  
Financial Inclusion ◽  
Nonperforming Loans ◽  
Z Scores ◽  
Negative Impacts

Developing economies are seeking to promote financial inclusion, i.e., greater access to financial services for low-income households and firms. This raises the question of whether greater financial inclusion tends to increase or decrease financial stability. A number of studies have suggested both positive and negative impacts on financial stability, but very few empirical studies have been made. This study focuses on the implications of greater financial inclusion for small and medium-sized enterprises (SMEs) for financial stability. It estimates the effects of measures of the share of bank lending to SMEs on two measures of financial stability — bank nonperforming loans and bank Z scores. We find some evidence that an increased share of lending to SMEs aids financial stability by reducing non-performing loans (NPLs) and the probability of default by financial institutions.

scholarly journals FINANCIAL INCLUSION: A PRELUDE TO ECONOMIC STATUS OF VULNERABLE GROUP

2016 ◽  
Vol 4 (12) ◽  
pp. 147-154
Author(s):  
Mukesh Kumar Sharma
Keyword(s):  
Low Income ◽  
Rural Areas ◽  
Financial Services ◽  
Financial Stability ◽  
Financial Inclusion ◽  
Current Status ◽  
Easy Access ◽  
Resource Base ◽  
Banking Services ◽  
The Government

India is a country where a sizeable amount of population lives in rural areas. They are engaged in agriculture and allied activities. Most of the people living in rural areas are poor. They do not have any access to the banks. The awareness and access of the poor to the banking services is important for the alleviation of the poverty. Their access to the banking services will contribute a lot to the growth and development of our country’s economy. Financial inclusion is a great weapon to overcome the financial backwardness as well as the establishment of good governance.It broadens the resource base of the financial system by developing a culture of savings among large segment of rural population, disadvantaged group and plays an essential role in the process of economic development. The Government of India and the Reserve Bank of India (RBI) have been making concentrated efforts periodically to overcome such vicious problems by promoting Financial Inclusion, being one of the important national objectives of the country. Since first phase of nationalization (1969) GoI continuously promoting financial inclusion through self-help groups, no frills account, simplification of KYC, Business correspondents etc., but no palpable effect could be seen in the plight of these financially vulnerable people. To mitigate this long drawn financial sufferings, Prime Minister Narendra Modi announced a new scheme in his Independence Day speech on 15th Aug 2014 called Pradhan Mantri Jan DhanYojana (PMJDY). Mission of PMJDY is to ensure easy access of financial services for the excluded section i.e. weaker section and the low income group. This effort will certainly go a long way in promoting economic growth and reducing poverty, while mitigating systematic risk and maintaining financial stability. This article focuses on the RBI, GoI initiatives, current status and future prospects of financial inclusion in India on the basis of facts and data provided by various secondary sources. It is concluded that financial inclusion shows positive and valuable changes.

A Financial Inclusion as a Catalyst for Poverty Reduction in Nigeria

2018 ◽  
Vol 4 (5) ◽  
pp. 1
Author(s):  
Akeem Olaide Abimbola
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Poverty Reduction ◽  
Empirical Studies ◽  
Banking System ◽  
Financial Inclusion ◽  
Mobile Banking ◽  
Secondary Sources ◽  
The Government ◽  
High Level

The purpose of this article is to examine the role financial inclusion can play in the reduction of poverty in Nigeria. Financial inclusion which can be explained as access to formal financial services such as credit, savings and insurance opportunities is still very vague in developing countries such as Nigeria where there is high level of poverty. The country has a large number of ‘unbanked’ people whose business activities are not captured in the country’s economic reports. These ‘unbanked’ populaces are illiterates who are either unemployed or under employed and lack access to financial services and information, and are totally excluded in the financial ecosystem and market. It examines the roles of government and financial institutions and the use of various mobile initiatives such as mobile banking, mobile money, agent banking etc. as financial inclusion tools to stimulate poverty reduction. Time series analysis on data obtained from secondary sources between the periods of 1992 and 2016 was adopted by the authors and the study covered financial inclusion as it relates to unbanked people in Nigeria. Other empirical studies in this field were used to strengthen the OLS findings. It was concluded that majority of the ‘unbanked’ in Nigeria are low income people who do not have access to financial services and information on financial inclusion. While few are timid on the need to use a bank, a large number of them are willing to use banking services and believe the availability of these services will help improve their economic condition. At the end of the paper, it is recommended that the government should encourage Banks to continue to take advantage of all the financial inclusion policies of the government in mobilizing funds from the informal sector into the banking system and this can be best done by increasing the amount of customers within the financial system as a tool for encouraging financial inclusion and stimulating the economy and thereby reducing poverty in the country

scholarly journals The Nexus between Mobile Money Regulation, Innovative Technology and the Promotion of Financial Inclusion in Zimbabwe

2021 ◽  
Vol 24 ◽  
pp. 1-33
Author(s):  
Howard Chitimira ◽  
Elfas Torerai
Keyword(s):  
Low Income ◽  
Rural Areas ◽  
Financial Services ◽  
Banking Sector ◽  
Regulatory Framework ◽  
Financial Inclusion ◽  
Innovative Technology ◽  
Technological Innovations ◽  
Mobile Money ◽  
The Poor

The advent of mobile money innovations has given people in rural areas, informal settlements and other poor communities an opportunity to participate in Zimbabwe's mainstream financial economy. However, the technology-driven money services have presented some challenges to the traditional banking sector in general and the regulation of financial services in particular. Firstly, most mobile money services are products of telecommunication corporations, which are not banks. Telecommunication companies use their network reach to provide mobile money services via mobile devices at a cheaper cost than banks across the country in Zimbabwe. As such, banks face unprecedented competition from telecommunications companies that are venturing into financial services. It also appears that prudential regulation of banks cannot keep up with the fast pace at which technological innovations are developing and this has created a disjuncture between the regulation and the use of technological innovations to promote financial inclusion in Zimbabwe. The Banking Act [Chapter 24:20] 9 of 1999, the Reserve Bank of Zimbabwe Act [Chapter 22:15] 5 of 1999 and the National Payment Systems Act [Chapter 24:23] 21 of 2001 have a limited scope in terms of the regulation of mobile money services in Zimbabwe. The Ministry of Finance and Economic Development launched the National Financial Inclusion Strategy (NFIS) 2016-2020 to provide impetus to the financial inclusion of the poor, unbanked and low-income earners in Zimbabwe. However, the NFIS appears to push more for bank-led financial inclusion than it does for innovation-driven initiatives such as mobile money services. This article highlights the positive influence of mobile money services in improving financial inclusion for the poor, unbanked and low-income earners in Zimbabwe. The article also seeks to point out gaps and flaws in the financial services regulatory framework that may limit the potential of mobile money services to reach more people so that they actively participate in the Zimbabwean economy. It is submitted that the Zimbabwean mobile money services regulations and the financial regulatory framework should be carefully amended in line with the recent innovations in mobile money to adequately regulate the use of mobile money services and innovative technology to address the financial exclusion of the poor, unbanked and low-income earners in Zimbabwe.

scholarly journals Customers‟ Perception of India Post Towards Financial Inclusion Services with Reference to Ariyalur District

2019 ◽  
Vol 8 (12) ◽  
pp. 1119-1128
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Financial Inclusion ◽  
Primary Data ◽  
Post Office ◽  
Customer Perception ◽  
Aged Person ◽  
The Mean ◽  
Convenience Sampling ◽  
One Way Anova

Financial Inclusion can be influenced by the customer perception such as availability of all financial inclusion services in all branch, reliable and prompt services, Affordable price, Post office staffs interact With friendly ( Accessible ) Safety and security transaction, affordable financial services, Simplicity procedure, Responsible to query, conveniently service under convenience sampling method were adopted. The primary data were collected with 50 Respondents of post office customers with the help of well structure close ended and 5 point likert scale questionnaire which consists of parameters to measure the perception variables. The collected data were analyses with the help of the mean rank and one way ANOVA analysis for validating the assumptions made by researchers. The study therefore done found that customers perception variable of post towards financial Inclusion processes were confirmed that the customers perception India variables had some effect on satisfaction of India post towards financial inclusion services. But, aged person, illiterate people, women , low occupation person and low income person have to attention and be conducted awareness camp. This may increase the financial inclusion in post office

Building blocks of financial inclusion through customer experience value at financial touchpoints in Southern Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nkosinathi Sithole ◽  
Gillian Sullivan Mort ◽  
Clare D'Souza
Keyword(s):  
Southern Africa ◽  
Low Income ◽  
Financial Services ◽  
Building Blocks ◽  
Customer Experience ◽  
The Body ◽  
Financial Inclusion ◽  
Structured Interviews ◽  
Content Type ◽  
Low Income Consumers

PurposeThis paper aims to examine customer experience value orchestrated by non-banks' financial touchpoints to understand how they enhance the financial inclusion of low-income consumers.Design/methodology/approachTwo independent but related studies were conducted using qualitative comparative analyses (QCA) research design with semi-structured interviews to compare and contrast customer experience value at two rural locations in Southern Africa. The interview transcripts were analysed using ATLAS.ti, which is a powerful operating system for analysing qualitative data.FindingsThe results indicate that non-banks in the two countries design financial services that include functional, economic, humanic, social and mechanic customer experience value dimensions.Research limitations/implicationsThe data for this study was collected from financial services customers of retailers and mobile phone network operators in only one research setting in each country. Further research could extend the comparative context for qualitative studies across similar markets. Other limitations are discussed in the paper.Originality/valueThis paper contributes to the body of knowledge by highlighting the salient and germane dimensions and components found to be important in understanding financial inclusion using customer experience value. To the best of the authors’ knowledge, this is the first study that incorporates customer experience value dimensions in understanding the financial inclusion of low-income consumers at the base of the social and economic pyramid in emerging markets.

IMPACTS OF FINANCIAL INCLUSION ON POVERTY AND INCOME INEQUALITY IN DEVELOPING ASIA

2021 ◽  
pp. 1-17
Author(s):  
WARATTAYA CHINNAKUM
Keyword(s):  
Developing Countries ◽  
Income Inequality ◽  
Low Income ◽  
Financial Services ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Principal Component ◽  
Financial Inclusion ◽  
Poor Households ◽  
Low Income Groups

This study investigates the impacts of financial inclusion on poverty and income inequality in 27 developing countries in Asia during 2004–2019 based on a composite financial inclusion index (FII) constructed using principal component analysis (PCA). The generalized method of moments (GMM) was employed for the estimation. The results show that financial inclusion can influence the reduction in both poverty and income inequality. The empirical findings also reveal the contribution of such control variables as economic growth in decreasing income disparity and trade openness in helping improve the standard of living of poor households despite its tendency to co-vary with income inequality. The present empirical evidence supporting the role of financial inclusion in reducing poverty and income inequality in developing countries has led to a policy implication that financial sector development should focus on the availability, usage, and depth of credit to cover all poor households or low-income groups to help improve their access to financial services, enable them to increase their income, and reduce the income gap between poor and rich households.

A Decade After the 2009 Global Recession: Macroeconomic Developments

2021 ◽  
pp. 2150011
Author(s):  
Wee Chian Koh ◽  
Shu Yu
Keyword(s):  
Low Income ◽  
Developing Economies ◽  
Emerging Market ◽  
Bank Lending ◽  
Low Income Countries ◽  
Short Term ◽  
Fiscal Stimulus ◽  
Cross Border ◽  
Global Recession ◽  
The Impact

Emerging market and developing economies (EMDEs) weathered the 2009 global recession relatively well. However, the impact of the global recession varied across economies. EMDEs with stronger pre-crisis fundamentals — such as large foreign exchange reserves, sound fiscal positions, and low inflation — suffered milder growth slowdowns, in part due to their greater capacity to engage in monetary and fiscal stimulus. Low-income countries were also resilient, as foreign aid and inflows of remittances remained relatively stable. In contrast, EMDEs that were heavily dependent on short-term capital flows — such as portfolio investment and cross-border bank lending — fared less well, especially those in Europe and Central Asia. A key lesson for EMDEs is the need to strengthen macroeconomic frameworks and create policy space to prepare for future global downturns.

Mobile Security in Low-Income Households' Businesses

2019 ◽  
pp. 576-595
Author(s):  
Bibi Zaheenah Chummun
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Industrial Revolution ◽  
Financial Inclusion ◽  
Services Sector ◽  
Security Breaches ◽  
Fourth Industrial Revolution ◽  
Security Challenges ◽  
Mobile Financial Services ◽  
Low Income Households

A wide range of technologies impinges on all disciplines including financial services in this era of the Fourth Industrial Revolution. The deployment and security of mobile phones have considerably increased financial services access such as mobile money to the low-income households in developing African markets recently. The financial services that were once randomly accessible to those financially excluded have now become a potential pathway to enhance financial inclusion in allowing the low-income households to transact through mobile financial services in a more speedy, reliable, and secure manner. However, many security challenges remain to be addressed to promote a more inclusive mobile financial system. This chapter focuses on mobile devices security landscape and unprecedented security breaches by cyber criminals and how those threats can be mitigated in a view to promote financial inclusion in the mobile financial services sector of emerging African markets in the midst of the Fourth Industrial Revolution.

Impact of Mobile Payment Applications and Transfers on Business

2020 ◽  
pp. 173-189
Author(s):  
Gladys Wanjiku Thuita
Keyword(s):  
Low Income ◽  
Financial Services ◽  
Financial Inclusion ◽  
Mobile Banking ◽  
Business Growth ◽  
Sustainable Business ◽  
Income Levels ◽  
Mobile Money ◽  
Slum Dwellers ◽  
And Training

Despite Kenya having over 40 banks, only three banks are accessible to the residents of Kibera Slum. Kibera Slum is located on the outskirts of Nairobi and is home to approximately 0.75 million people. A majority of the population in Kibera Slum comprises of either unemployed or casually employed adults whose income levels are considerably low, making it impossible for many of them to operate formal bank accounts. However, the evolution of mobile money technologies has made financial inclusion and innovation possible for Kibera Slum residents. The mobile-banking facility known as M-Pesa enables mobile money remittances and has an outstanding record of financial inclusion and innovation. The objective of this research was therefore to examine financial inclusion and innovation in the Kibera Slum. The study used self-administered questionnaires to answer to two objectives. The study found out that M-Pesa services are accessible and widely used in Kibera Slum. The study also found that M-Pesa business is rated average as a source of income to M-Pesa agent. Ultimately, the study observed that financial inclusion and financial innovation are prevalent in Kibera Slum. These findings have significant implications: the study sheds light on the fact that the slum dwellers have embraced the use of M-Pesa services as a platform to access financial services, establishing more innovative financial services that will help the low income earners expand their businesses and training M-Pesa agents will enhance sustainable business growth and promote innovation.

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