Financial Inclusion in Developing Asia: Transactional Accounts, Savings, and Borrowing

This brief examines three key dimensions of financial inclusion that the authors believe to be especially relevant for empowering the poor: transactional accounts, savings, and borrowing. It then sets forth some broad policy options for leveraging finance as a tool for empowering the poor.

Key findings of the report include: 

• There is significant scope for improving all three dimensions. For example, 1.3 billion Asian adults—or 46% of the adult population—have accounts in formal financial institutions, a much lower figure than the 90% in high-income countries.
• In order for finance to empower Asia’s poor, policy efforts must give due regard to the last mile, i.e., not just broadening access to finance, but inducing the actual, beneficial use of finance. Examples include financial literacy and other financial education programs and encouraging banks and other institutions to design simple-touse financial products for poor clients with little education.
• Better data for financial inclusion is required to inform decision making. Until recently few countries tracked the outreach of their financial systems, and no national reporting comparable to that on financial performance is available presently. Therefore, both national and international data efforts will allow for a more granular assessment of financial inclusion challenges.