Debate

Contesting Financial Inclusion

Philip Mader

ABSTRACT

This contribution critically assesses financial inclusion as an intervention in

the development space. It examines the turn from microfinance to financial
inclusion, with the introduction of new actors and practices; new ideas and
ideologies; new theories of change; and new expectations toward clients. It
then considers three key issues and contests the arguments made by pro-
ponents of financial inclusion about them: first, the argument that financial
inclusion facilitates broader development outcomes; second, the claim that
poor people gain poverty alleviation through financial inclusion; and third,
the suggestion that financial inclusion is good business. In all three areas,
the author highlights shortcomings in the evidence base and argues that high
expectations of financial inclusion serving as a core pro-poor, private-sector
led development intervention lack justification. Rather, financial inclusion
should be recognized as a contested and contestable enterprise.

INTRODUCTION

Many members of the development community have endorsed financial in-

clusion with an evangelical fervour reminiscent of the microfinance hype in
the 1990s and 2000s. Access to financial services features in at least 5 of the
17 Sustainable Development Goals (SDGs) set by the United Nations for
2030.1 The enthusiasm of donors and philanthrocapitalists coincides with
an unprecedented eagerness among transnational corporations, especially in
the financial services and information technology (IT) sectors, to deal with
poor people. But in the collective rush to draw the poor2 into formal financial

The author thanks Servaas Storm and four anonymous referees for their helpful feedback, as
well as Jodie Thorpe and Jim Sumberg for inputs on an earlier version. All errors are the author’s
own.
1. Goals 1 (poverty), 2 (hunger), 5 (gender), 8 (growth) and 9 (infrastructure).
2. The shorthand ‘the poor’ is used in this article to refer to the main target group of finan-
cial inclusion efforts in the global South (low-income people), at the risk of making this
Development and Change 00(0): 1–23. DOI: 10.1111/dech.12368

C 2017 International Institute of Social Studies.
2 Philip Mader

markets, three critical issues are commonly overlooked. Does financial in-
clusion really promote development? Do poor people benefit in meaningful
ways from using financial services? And does financial inclusion make good
business sense?
The financial inclusion ‘movement’, represented by (among others) think
tanks like Accion International, social business gurus like Muhammad
Yunus, funders like the World Bank, and corporate-backed promoters like
the MasterCard Foundation, generally takes positive answers to these ques-
tions for granted — at least in public pronouncements. As a counterpoint,
this article presents a structured, critical policy discourse analysis3 which
sets recent high-level textual artefacts against other evidentiary materials
and contravening logics. It challenges the emergent development orthodoxy
of financial inclusion serving as a core pro-poor private-sector led devel-
opment intervention, and shows financial inclusion to be a contested and
contestable enterprise. In the context of the Forum 2018 Debate, this con-
tribution thereby offers a necessary challenge to a set of policies which,
despite being part and parcel of financialization and the expansion of rentier
capitalism, have often escaped critical scrutiny, even from many progressive
scholars and activists.
The programme of financial inclusion presents a proposal to address the
immense social, political and economic injustices suffered over several
decades of unmitigated debt accumulation (Graeber, 2011) — a paradoxi-
cal proposal, given that it addresses the social costs of financialization (see
Epstein, this issue) by facilitating even more extensive debt relationships
and a further commodification of livelihoods in the global South. As micro-
finance gradually gives way to this ‘broader push to extend financial mar-
kets [which] introduces new products, new providers, and new target mar-
kets’ (Cull et al., 2013: 1), a re-evaluation of the developmental, social and
business logics of financial inclusion — microfinance’s heir apparent —
is urgently needed. This reassessment is all the more important given the
imbrication of financial inclusion with the promotion of novel digital finan-
cial technologies deployed in the incipient ‘crusade’ against cash (Mader,
2016), the crystallization of the ‘fintech–philanthropy–development (FPD)
complex’ as a powerful force reshaping transnational governance (Gabor
and Brooks, 2016: 424), and the reconfiguration of social policy agendas to
generate more financial assets for investors by collateralizing, securitizing
and capturing government-to-citizen payments (Lavinas, this issue).
After an explanation, in the first section, of the turn from microfinance
to financial inclusion, three issues will individually be discussed in the sub-
sequent three sections: the lack of evidence that expanding financial access

group appear artificially homogeneous or clearly-defined. A discussion of this intractable

problematic can be found in Mader (2015: 78–81).
3. This contribution draws upon a structured review of assumptions and evidence using a
greater range of sources: see Mader (2016).
Debate: Contesting Financial Inclusion 3

for poor people promotes broader socio-economic development; the lack

of evidence that expanding financial access actually brings poor people
immediate benefits; and the dubious business rationale for full financial in-
clusion. With due caution, the argument here is not that financial inclusion is
harmful or destined to fail; rather, that currently there is insufficient evidence
for financial inclusion being development-promoting, poverty-alleviating,
and indeed profitable enough, to justify all the attention and resources di-
rected toward it.

THE TURN FROM MICROFINANCE TO FINANCIAL INCLUSION

As a background to any discussion of financial inclusion in developing

countries, its relationship with microfinance needs to be considered. Modern
microfinance emerged in the 1970s and was integrated by the World Bank
into Structural Adjustment Programmes. It developed into a global finance–
development hybrid specialized in making high-interest loans, which today
amount to around US$ 100 billion. But in the last decade, and particu-
larly since 2010, microfinance institutions (MFIs) have come under fire
for their high interest rates (around 35 per cent on average, according to
The Economist, 2014), their fixation on credit over other financial services
(Mader, 2015: 33–34), the lack of demonstrable poverty impact (Duvendack
et al., 2011; Stewart et al., 2012), their questionable record on women’s em-
powerment (Fraser, 2009; Karim, 2011), and for driving over-indebtedness
(Guérin et al., 2015).
Since then, ‘financial inclusion’ has emerged as a new label. Some crit-
ics initially dismissed this as ‘an almost entirely fake agenda’ (Bateman,
2012), and there is some truth to this suggestion of a mere re-branding, be-
cause much of today’s financial inclusion activity is still microfinance: small,
short-term, high-interest loans extended to low-income people. But treating
financial inclusion as only a terminological bait-and-switch, and nothing
more, would also overlook some profound yet gradual, ongoing changes.
Beyond offering a new developmental flavour-of-the-month, financial in-
clusion has breathed new life into the previously-flagging ‘poverty finance’
(Rankin, 2013) agenda in development in at least four important ways: new
practices; new guiding ideas/ideology; new theories of change; and a new
invitation to live by finance.
New practices: financial inclusion invites a new set of powerful players
and practices into organized financial dealings with the poor; while still ‘in-
cluding’ MFIs, financial inclusion also welcomes older community-based
programmes and cooperative institutions back into the fold. At the same
time, other actors like payday lenders, large banks, technology firms, mo-
bile network operators and credit card companies are also now ‘included’.
Whereas microfinance was a distinct and free-standing industry, financial
inclusion blurs the lines between different types of service providers and
4 Philip Mader

practices. For instance, mainstream companies may now downscale into the
‘micro’ segment, while large MFIs scale up to acquire formal banking li-
cences; a plethora of ‘fintech–microfinance partnerships’ is emerging. With
financial inclusion, the role of the state also changes: in microfinance, gov-
ernments were primarily expected to deregulate and make space for MFIs to
grow, but in financial inclusion they are expected to actively promote. The
Alliance for Financial Inclusion (AFI), for instance, has assembled policy
makers and regulators from 96 countries under the G20’s aegis (Gabor and
Brooks, 2016) to create an ‘enabling’ environment for new technologies, to
bring about a ‘proportional’ framework of regulation, to ‘integrat[e] con-
sumer protection and financial literacy’, and for ‘collecting and utilizing
data’ (AFI, 2015a). The Indian government has emerged as the paragon of a
new activist breed of financial inclusion state, with its policy-driven ‘largest
financial inclusion scheme in the world’, Pradhan Mantri Jan Dhan Yojana
(PMJDY)4 for universal bank accounts, running since 2014, its promotion
of ‘RuPay’ cashless payment cards, and its shocking ‘demonetization’ of
high-denomination rupee notes in late 2016, aimed at driving the uptake of
digital financial services (see Chandrasekhar and Ghosh, this issue). These
new practices have fairly little in common with microfinance.
New ideas/ideology: financial inclusion blends financial logics with con-
temporary social justice vernacular, aligning finance with the discourses of
social inclusion that have framed the post-2015 ‘Sustainable Development’
agenda. Statements like ‘[o]ne key component of inclusive development is
financial inclusion’ — taken from a headline African Development Bank
publication (Triki and Faye, 2013: 25) — showcase the blending of finance
into donor agendas of economic inclusion and inclusive development. The
World Bank and other multilaterals see financial inclusion as integral for
‘inclusive growth’ (Demirgüc-Kunt et al., 2017) — a (poorly-defined) term
that is championed by the World Economic Forum (WEF, 2017). At an
ideological level, financial inclusion bonds finance with broader aspirations
for justice and equality, while stymying critical engagement with financial
expansion — after all, who would argue for financial exclusion? — and
removing from the picture questions about how markets generate inequality.
An inability to partake in markets is one risk poor people commonly face, but
being incorporated into markets on highly adverse terms is another (Hickey
and du Toit, 2013). Participation in markets can exacerbate existing inequal-
ities and produce new forms of exclusion (Meagher, 2015), and inclusive
financial markets by no means automatically offer poor people a ‘fair’ deal:
they generally offer lower-quality services at higher prices, at least in the
absence of targeted regulation and viable non-market alternatives.
New theories of change: financial inclusion brings changed expecta-
tions of how poor people should benefit from engaging with finance. The

4. Variously translated as ‘Prime Minister’s Money Scheme’ or ‘Prime Minister’s People’s

Wealth Programme’.
Debate: Contesting Financial Inclusion 5

‘original’ (microcredit) theory of change proposed poverty alleviation re-

sulting from microloans and enabling entrepreneurial activities to generate
higher incomes. By contrast, financial inclusion theory is agnostic towards
entrepreneurship, and instead focuses on two acts of financial intermedi-
ation which I call intertemporal intermediation, and interspatial-interclass
intermediation. With intertemporal intermediation, the idea is that a key eco-
nomic problem for low-income people (who often have irregular incomes)
is the disconnect between times when they have money and times when
they need money. The crucial role of financial services, the theory suggests,
is to ‘allow people to reallocate expenditure across time [meaning that] if
you don’t have the ability to pay for things now, out of current income, you
can pay for them out of past income or future income, or some combination
of both’ (Rutherford, 2000: 2). Microeconomically, then, financial services
are proposed to alleviate poverty by virtue of shifting money across time.
Interspatial-interclass intermediation refers to a macro-level theory that fi-
nance drives economic growth by lowering transaction costs and distributing
capital and risk. Finance moves money from places and people with excess
capital to places and people requiring capital, and the better-connected these
places and people are, the more growth results from economic interactions.
Thus, macroeconomically, financial inclusion is about connecting greater
numbers of capital-providers and capital-users, driving economic growth,
the benefits of which will reach poor people. Both theories of change, no-
tably, remove the distinction that once was observed in microfinance between
‘good’ clients (who use finance for something productive) and less worthy
clients (who will, for instance, consume), such that now the focus is on
offering services to all: different people have different financial needs — all
have some — and society benefits from all these needs being met, via the
right products at the right prices.
New invitation to live by finance: lastly, the turn from microfinance
to financial inclusion signifies a change in how clients are supposed to
engage with financial services. More is expected from them than when they
were ‘only’ presumed to be microentrepreneurs. Since financial inclusion
involves bundling and shifting income streams and expenditures (intermedi-
ating) across time, people must show even more responsible and calculative
behaviours than before: planning for and reacting to opportunities, needs,
crises, setbacks, and so on, by making the right financial choices. Whereas
microentrepreneurs ‘only’ had to invest in simple businesses and make a
profit, financially included households need to assess multidimensional risks
and opportunities, plan well ahead and ‘live by finance’ by taking the right
decisions.5 Consequently, a plethora of financial education and ‘financial
literacy’ initiatives now target poor people. They are often intended as
substitutes for consumer protection, by helping clients ‘self-protect’ against

5. The conceptualization of financialization as ‘an invitation to live by finance’ comes from

Martin (2002: 3) and was adopted by Roy (2010: 32) to analyse microfinance.
6 Philip Mader

poor choices or offers (McKee et al., 2011: 3). However, such education
initiatives are costly, and their effectiveness is in doubt (World Bank, 2014:
80–85); therefore attention has increasingly turned to cheaper behavioural
instruments like commitment devices and ‘nudges’. This behavioural
turn also follows a number of microcredit impact studies which found
scant evidence of poverty reduction, but discovered that credit reshaped
borrowers’ spending patterns; for instance, microcredit in India did not raise
borrowers’ incomes, but it induced them to reduce spending on various
‘temptation goods’ (Banerjee, Dulfo et al., 2015: 22). Commitment-based
savings devices have been found to help ‘present-biased’ poor people
overcome ‘time-inconsistent preferences’ and save more money (Dupas and
Robinson, 2013). Savers in the Philippines were more likely to quit using
tobacco when threatened with confiscation of their savings (Giné et al.,
2010). Researchers, practitioners and development funders have seized
on these and similar findings, and sought to integrate financial services
with mechanisms for building clients’ financial ‘capability’, defined as ‘the
combination of knowledge, skills, attitudes, and behaviors a person needs
to make sound financial decisions that support well-being’ (Arnolds and
Rhyne, 2016: 7).
Financial inclusion is not an alternative to microfinance, but its continua-
tion and expansion. Development actors further pursue the original premise
of microfinance — that financial services generate broader development
outcomes and poverty alleviation. But the reframing of ‘poverty finance’
(Rankin, 2013) as financial inclusion (while allowing microfinance to con-
tinue, at least for now) has a number of implications: it opens the space
to larger financial businesses and other powerful capital actors; ideologi-
cally positions finance as a central element of social inclusion; reinforces
theories of finance as a crucial economic factor; and deploys finance as a
driver of ‘good’ behaviours to overcome poverty. The next three sections
will critically evaluate and contest this ascendant financial inclusion agenda,
by highlighting three particular challenges posed by the current state of
evidence and practice.

FINANCIAL INCLUSION AND DEVELOPMENT OUTCOMES

When advocates of financial inclusion suggest that both individuals and

societies as a whole benefit, the implicit theory of change (as sketched
above) differs from the older, narrower one underlying microfinance, which
emphasized the economic and gender-empowerment benefits of microenter-
prise funding. This new theory is hardly more modest, as exemplified by the
2011 ‘Maya Declaration’, promulgated by the G20’s AFI. It proclaims that
central bankers around the world now ‘[r]ecognize the critical importance of
financial inclusion to empowering and transforming the lives of all our peo-
ple, especially the poor, its role in improving national and global financial
Debate: Contesting Financial Inclusion 7

stability and integrity and its essential contribution to strong and inclusive
growth’ (AFI, 2015b, emphasis added). Other AFI statements even more
sweepingly hold that ‘financial inclusion is an important part of the solution
to current global economic problems’ (Hannig, 2013: 44). The Global Part-
nership for Financial Inclusion (GPFI), another G20 initiative, also claims
that a financial system which ‘excludes the vast majority of citizens . . . can-
not contribute to national economic activity, promote job creation, increase
income and boost shared prosperity’ (GPFI, 2014: 3).
What is the basis for these great expectations of empowering and
transforming the lives of poor people, creating jobs, increasing incomes,
boosting ‘shared prosperity’, and helping solve global economic problems,
with financial inclusion? The G20’s Financial Inclusion Experts Group
proposes that ‘[f]inancial sector development drives economic growth by
mobilizing savings and investing in the growth of the productive sector. The
institutional infrastructure of the financial system also contributes to reduc-
ing information, contracting and transaction costs, which in turn accelerates
economic growth’ (ATISG, 2010: 44). While many publications (including
ATISG, 2010) discuss hardly any evidence at all for such claims, some
(for example, World Bank, 2014) claim there to be a substantial evidence
base. But a closer look reveals this to be flimsy. The World Bank’s Global
Financial Development Report 2014, for instance, bases much of its reason-
ing on correlations between certain measures of financial inclusion (such as
account ownership) and positive macroeconomic and social outcomes (such
as economic growth or lower income inequality). To illustrate this, the report
highlights the differences between Sweden and Haiti in terms of income in-
equality and equality of access to bank accounts (ibid.: 41). While being able
to discuss many such cross-country comparisons and correlations, however,
the report must take a bold logical leap when imputing causation into them.6
The World Bank’s main argument is built on three relatively old publica-
tions and the axiomatic, abstract models they present: Banerjee and Newman
(1993), Galor and Zeira (1993), and Aghion and Bolton (1997). It claims
they show ‘lack of access to finance can be critical for generating persistent
income inequality or poverty traps, as well as lower growth’ (World Bank,
2014: 14). In fact, none of the three papers support such strong and broad
claims. Banerjee and Newman (1993) and Galor and Zeira (1993) both mod-
elled the effect of financial access on poverty, focusing only on individuals’
ability to fund investments in their own education. Unequal access to credit,
they argued, led to differences in human capital (or skills), which led to
greater inequality and lower growth throughout the economy. However, the

6. Cull et al. (2014: 6) acknowledge that ‘[a]t the macroeconomic level, the evidence has
to rely on cross-country comparisons’. Some texts add nuance, for example: ‘the cross-
sectional nature of the data allows us to interpret these results only as significant correlations,
not causal relationships’ (Allen et al., 2012: 24), but such data are widely claimed to be
compelling evidence.
8 Philip Mader

role of educational credit is far narrower than financial inclusion itself, and
in terms of policy implications, the papers could just as well serve to argue
the case for more egalitarianism in education policies (not broader access
to finance). The third key paper, Aghion and Bolton (1997), meanwhile,
does not even argue for expanding access to finance; rather, it proposes
that policy makers should institute permanent wealth redistribution schemes
because, so the authors claim, this would help equalize access to finance
— the reverse causation of that asserted by World Bank (2014). Thus, in a
sober evaluation, these three theoretical papers, plus the cross-country cor-
relations, which form the basis of the World Bank’s cornerstone report on
financial inclusion, offer only a weak evidence base, at best.
Yet such misinterpretations and selective readings of economics papers
pervade the financial inclusion literature far more broadly. Another important
empirical publication (cited more than 8,000 times in total, according to
Google) is King and Levine’s (1993) ‘Finance and Growth: Schumpeter
Might be Right’ — a seminal paper in finance policy which specifically
investigated neither developing countries nor the inclusiveness of financial
systems, it is nonetheless regularly fielded as evidence for financial inclusion
being a key to developing countries’ growth. King and Levine modelled and
tested a relationship between the growth of national private financial sectors
and macroeconomic variables, primarily GDP, finding that as the financial
sector grew, so did the economy. But it remains unclear what, if anything,
these findings say about financial inclusion of the poor (or anyone), because
not the size of financial sectors, but whom they reach, is the issue; a massive
financial sector may still cater to only part of the population. Furthermore,
King and Levine’s paper offers no evidence that economic growth (whether
driven by financial growth or not) actually benefits poor people. Another
article that is often cited as proof for financial development benefiting the
poor in fact argues finance impacts only ‘indirectly on income inequality,
through its effect on economic growth’ (Jalilian and Kirkpatrick, 2005:
649). This paper, too, used overall private credit relative to GDP to measure
financial development, and therefore again can say little about inclusive
financial access. Furthermore, it concluded that only in the longer term
(after first actually exacerbating inequality) would financial growth create
greater equality. Similarly, Beck et al. (2007: 27), with their widely-cited
finding that ‘[f]inancial development disproportionately boosts incomes of
the poorest quintile and reduces income inequality’, only engage with overall
private credit, not credit for the poor.
In short, while advocates invoke these articles as evidence for financial
inclusion benefiting poor people through macroeconomic improvements, the
articles themselves fail to distinguish between financial sector growth (or
bloating) and financial inclusion, and they say very little (if anything) about
access to financial services for poor or presently-excluded people. Worse
still, the imputed logic may be false, in that larger financial sectors offer
more credit for larger, industrial enterprises, not for the poor, and this might
Debate: Contesting Financial Inclusion 9

explain macroeconomic growth and improvements in inequality. If that were

the case, the direction of more financial resources towards ‘inclusive finance’
— whose customers are likely to use credit for consumption, or invest in
low-growth microenterprises — would even hinder growth and exacerbate
inequalities (Bateman and Chang, 2012).
The ‘macro’ argument for financial inclusion rests on the suggestion
that expanding access to finance drives growth and other pro-poor macro-
economic changes; but the evidence, as we have seen, is inconclusive or of
questionable relevance. The interspatial-interclass intermediation theory of
change for financial inclusion thus appears very weak. The underlying ax-
iomatic and abstract models are based on an assumption about more finance
being better for growth; this appears even more archaic since the onset of
the Great Financial Crisis, and since even the International Monetary Fund
has begun to revise this assumption (Arcand et al., 2015). The many correla-
tions between financial and developmental outcomes, which texts like World
Bank (2014) present, are compelling, but their causality is probably spurious,
with an unrecognized variable, such as quality of government, generosity
of welfare states, etc. actually driving both. Or the causality may even be
the reverse of what is expected. The correlations are akin to the relationship
between automobile ownership and incomes: one would find statistical cor-
relations across countries and people, but to call for ‘automotive inclusion’
as the key to higher incomes would be outlandish. More logical is that lower
economic inequality, higher incomes and better access to jobs drive usage
of financial services (and cars for that matter), because people who reliably
can satisfy their more urgent needs — such as food, housing or healthcare
— are able to afford financial services, too. Prioritizing financial inclusion
in development policy then puts the cart before the horse. As Sarma and Pais
(2011: 626) recognize: ‘building of financially inclusive societies would
require attempts to reduce income inequality, enhance literacy levels and
improve physical and communication infrastructure’; and since, by all ac-
counts, this is what financial inclusion advocates aim for, they should focus
on socio-economic development before financial development.

FINANCIAL INCLUSION AND POVERTY ALLEVIATION

With the ‘macro’ theory in doubt, what about more direct, ‘micro’ impacts
on the poor? Financial inclusion proponents generally argue that it brings
poor people significant, tangible, direct benefits, and their argument rests
on the intertemporal intermediation theory of change: that financial services
are crucial because they allow poor people to move money over time and
mitigate shocks, in order to enhance their economic opportunities, gain
access to goods and services, and manage and allocate their resources better.
Some proponents even suggest that ‘poor households are in continual need
of financial tools to improve their productivity and secure the best possible
10 Philip Mader

consumption and investment choices, all the while managing potential or

existing risks’ (Ledgerwood and Gibson, 2013: 27, emphasis added). Despite
having remained a less-fervent promoter of microfinance than the World
Bank and many other multilaterals, the UN (2006: 4) has proclaimed: ‘we
know that access to a well-functioning financial system can economically
and socially empower individuals, in particular poor people, allowing them
to better integrate into the economy of their countries, actively contribute to
their development and protect themselves against economic shocks’. Much
literature in the finance and development space echoes such claims about
financial services playing a critical role in directly (not indirectly, through
economic growth) improving the lives of poor and low-income populations
(see ATISG, 2010: 1; Thingalaya et al., 2010: 21–22; UNCTAD, 2014: 5).
With its tone of urgency and promises of impact, the promoter discourse
about financial inclusion echoes the hubristic claims once made for micro-
credit, for instance by Muhammad Yunus, who used to regularly tell audi-
ences that microfinance would send poverty to ‘poverty museums’ within
two generations (Yunus, 1997). Indeed, most early financial inclusion texts
drew heavily on the claims made for microcredit (e.g. Helms, 2006: 29ff;
UN, 2006). Even today, the financial inclusion literature generally treats an
absence of formal financial services, prima facie, as an evident deficiency.
For instance: ‘An estimated 2.7 billion adults worldwide do not have credit,
insurance, or savings with a bank or other formal institution . . . . Yet, the
more we learn about the financial lives of poor people, the clearer it is that
low-income families need a wide array of financial services’ (Ehrbeck et al.,
2012: 1). With even greater pathos, the G20 argues:

For poor people, money management is an absolutely central part of daily life, perhaps more
than for any other economic group. . . . More than two billion adults do not have access to
formal or semi–formal financial services. They are the financially excluded in a world where
access to financial services can mean the difference between surviving or thriving. (ATISG,
2010: v, 4)

Do financial services really make the difference between surviving and

thriving? Only in rare instances do proponents not present finance as an
evidently pressing, universal need. As one exception, the UN (2006: 3)
concedes that ‘[i]nclusive finance does not require that everyone who is
eligible use each of the services, but they should be able to choose to use
them if desired’.
That microcredit, in any ‘miraculous’ or transformative way, brings
poverty relief has been so seriously dispelled by accumulated research
findings — both from systematic reviews of prior studies (e.g. Duvendack
et al., 2011) and results from new randomized studies (e.g. Banerjee, Kar-
lan and Zinman, 2015) — that microfinance promoters’ declamations now,
at least for the most part, avoid making claims that microfinance measur-
ably reduces poverty. For instance, the answers of the Consultative Group
to Assist the Poor (CGAP) to frequently asked questions (FAQs) serve up
Debate: Contesting Financial Inclusion 11

carefully-formulated claims that microfinance and financial inclusion ‘help

improve individual and household welfare and spur small enterprise activ-
ity’, while studiously avoiding the (refutable) claim that poverty is actually
reduced.7 Even sympathetic observers increasingly concede that ‘the best
estimate of the impact of microcredit on poverty is zero’ (Roodman, 2012).
To offer a snapshot of the wider evidence base for this: a recent slew of
six high-profile randomized control trial (RCT) studies8 delivered few con-
clusive impact results, and the lead authors conceded a ‘lack of evidence
of transformative effects on the average borrower’ (Banerjee, Karlan and
Zinman, 2015: 3). Particularly regarding the intensely-studied question of
whether access to microcredit raises incomes, studies find that while house-
holds do invest more in business ventures and productive assets, this does
not raise their incomes on average. At a granular level, the studies present a
complex tangle of findings, non-findings and uncertainties: results from one
country usually do not replicate in others; reverse impacts are sometimes
found; impacts vary widely between different client groups (many signifi-
cant impacts are found only for very small subpopulations, such as the top 5
per cent or highly regular service users), which distorts the averages.
However, the argument made for financial inclusion beyond microfinance
is a different one: it is about expanding freedom of choice and enabling better
money management for poor people. This would be hard to refute with any
evidence. The claim that poor people are active, savvy, skilful financial
managers who seek better tools is most potently made in the book Portfolios
of the Poor (Collins et al., 2009), which draws on evidence gathered from
so-called ‘financial diaries’.9 The authors evaluate these data through an
analytical lens focused exclusively on poor people’s monetary activities
(where the authors argue the interesting ‘action’ is; ibid.: 11), disregarding
any non-monetary exchanges (which are very common among poor people)
or changes to physical assets (even though, as the authors acknowledge, these
constitute the bulk of poor people’s wealth). Unsurprisingly, the authors find
poor people to actively manage money in many different ways; they interpret
any instance of not immediately spending all available income — not living
entirely ‘hand-to-mouth’ — as an act of financial intermediation, simply
because money has been moved over time.
Collins et al. even go so far as to argue that poor people’s problem of
having low incomes is trumped by their lack of access to reliable, convenient,
flexible and appropriately structured financial tools with which to manage
low incomes. ‘Not having enough money is bad enough’, they conclude;

7. See: www.cgap.org/about/faq/what-impact-financial-inclusion-efforts (accessed 14 June

2017).
8. Published in a special issue of the American Economic Journal: Applied Economics 7(1),
January 2015.
9. The method, more accurately, consisted of regular interviews with household heads to
reconstruct their incomes and expenditures, ex-post, rather than keeping actual diaries.
12 Philip Mader

‘[n]ot being able to manage whatever money you have is worse. This is
the hidden bind of poverty’ (ibid.: 184). There can be no doubt that poor
people lead complex financial lives, as Collins et al. persuasively show;
but that, amid the ‘triple whammy’ (ibid.: 39–45) of (1) low incomes, (2)
irregularity/unreliability, and (3) lack of financial tools, the latter two should
really be the worst problems, appears strange. In making this argument,
Portfolios of the Poor — hailed as the ‘new bible’ for poverty eradication10
— replaces one myopic view of poverty (merely a lack of money) with
another (a lack of financial tools), leading to the (potentially disastrous)
consequence that financial inclusion advocates and practitioners are free to
turn their attention away from enhancing poor people’s paltry resources, and
concentrate on the much more trivial task of selling them services with which
to marshal and manage such meagre resources. As the lead authors of the
RCT collection suggest: ‘If microcredit’s promise was increasing freedom of
choice it would be closer to delivering on it’ (Banerjee, Karlan and Zinman,
2015: 3).11 Thanks not least to this analytical sleight of hand — making
‘lack of money’ as a problem disappear from view, putting ‘lack of financial
intermediation and choice’ centre stage — many policy publications are
able to argue that the key impact of financial inclusion must not be poverty
reduction, but improving client ‘welfare’ (see Allen et al., 2012: 35; ATISG,
2010: v, 1, 4; Ledgerwood, 2013: xvii and Ch. 5; Sarma and Pais, 2011: 613;
UNCTAD, 2014: 4–5).
Welfare, as an economic concept, is a vague and obscure (bordering on
tautological) notion: simply gaining additional options in any given situation
is already an improvement. Any household that gains the option of using
financial tools to smooth its consumption or reallocate its expenditures gains
welfare; notably, welfare would even increase if the usual indicators of
poverty, such as income or asset levels, remained unchanged. Certainly,
allowing poor households to smooth consumption or manage shocks, or
generally give them more choices, can be indicative of helping them cope
with poverty, but not of helping them escape poverty. Consequently, the
benefits to the poor from financial inclusion, which still are often presented as
ground-breaking in grandiose public statements, are becoming increasingly
blurred. In the words of the UN (2006: iii): ‘A small loan, a savings account
or an insurance policy can make a great difference to a low-income family.
They enable people to invest in better nutrition, housing, health and education
for their children. They ease the strain of coping with difficult times caused
by crop failures, illness or death. They help people plan for the future’. Yet
the concern for enabling people to invest in vital goods or helping them

10. Jonathan C. Lewis on the back cover of the 2009 edition.

11. This is undeniably true; but it says nothing about the consequences of the choices peo-
ple make, which, in unfortunate cases, include over-indebtedness, financial losses and a
curtailment of future choices (Guérin et al., 2015).
Debate: Contesting Financial Inclusion 13

plan for the future, noble as it may be, is hardly the same as ensuring their
investments are likely to succeed and generate better futures for them.
The obfuscation of the poverty alleviation issue goes even further with
some advocates now suggesting that access to financial services should,
in its own right, be recognized as empowering and granting a sense of
inclusion. Helms, for example, suggests that financial instruments bring
intrinsic enjoyment and empowerment, in that ‘within our lifetime poor and
low-income people throughout the developing world can enjoy permanent
access to the financial services they need. These financial services . . . enable
poor people to climb the first rung on the ladder out of poverty on their own
terms’ (Helms, 2006: 139, emphasis added).12 Helms also likens financial
inclusion to the participation in world society that the Internet facilitates
(ibid.: 145). Other authors very explicitly and directly associate finance
with empowerment: ‘Access to finance by the poor and vulnerable groups
is a prerequisite for poverty reduction. Truly speaking, providing access
to finance is a form of empowerment of vulnerable groups’ (Thingalaya
et al., 2010: 11); still others proclaim finance to be crucial for inclusion writ-
large, with statements like ‘financial inclusion may well be about money
and finance, but with the ultimate objective of directly abolishing the state
of social exclusion in the economy’ (Teki and Mishra, 2012: 76). All this
may be true — but evidence of poverty reduction it is not.
In terms of ‘micro’ impacts, then, although financial inclusion might
well bring many intangible benefits, these are evidently, for the most part,
assumed rather than demonstrated. Digging below the rhetorical surface
of financial inclusion discourse, the promised ‘poverty alleviation’ effects
reveal themselves as an ability to intertemporally intermediate money, an
expansion of financial choices, and an intangible sense of inclusion; by no
means meaningless things, but fairly superficial impacts which are far from
transformative. Viewed from a poverty alleviation perspective, moreover,
once more the relative positions of cart and horse come into question: if
poor people actually enjoyed higher incomes, their irregularity would surely
be far less of a problem, and the financial tools with which to manage
their incomes would become affordable. Although it is reasonable to treat
‘financial exclusion as a manifestation of social exclusion’ (Sarma and Pais,
2011: 626), to (conversely) locate it at the heart of these exclusions is
unjustifiable without further evidence.

FINANCIAL INCLUSION AND GOOD BUSINESS SENSE

Leaving aside such questions of economic and social policy, the case for fi-
nancial inclusion may also be made as simply a viable business proposition,

12. No explanation is given for why those routes out of poverty that can be pursued via financial
services usage would be the routes that poor people would choose ‘on their own terms’.
14 Philip Mader

worthwhile pursuing in its own right as long as it does no harm. For finan-
cial inclusion to make good business sense, financial actors must succeed
at profitably offering decent-quality services at affordable prices and at
encouraging clients to use them. Major financial corporations (as well as
non-profits connected to major finance companies, such as Citi Foundation
and MasterCard Foundation) have already signalled their strong interest in
financial inclusion as a business opportunity, and many publications assume
the business case, or ‘business potential’ (Teki and Mishra, 2012: 128), to
be evident. For instance:

over the next decade, the depth of poverty will diminish as millions of families will leave
extreme poverty behind. With slightly more discretionary income such families can begin
to afford financial services, opening the possibility for the private sector to serve them. We
estimated that full inclusion could bring a potential $6 to 8.5 billion revenue pool into the
financial sector. (Accion, 2009: 3)

Similarly, a report commissioned for Visa estimates that micro and small
merchants in developing countries alone will pay around US$ 35 billion
annually in fees, if their transactions, amounting to more than US$ 6.5
trillion, are digitized and brought into the formal financial system (Carlberg
et al., 2016).
However, that businesses will be able to profitably and decently serve all
poor people is not self-evident — as, not least, numerous calls for government
support suggest. Why is the financial inclusion of poor people expected to be
a viable and interesting business opportunity for private, for-profit financial
sector actors? Here, too, the experience of microfinance often serves as
a starting point. For instance, the G20 Financial Inclusion Experts Group
highlights that MFIs have proven that: ‘clients often pay market rates for
financial services and are reliable clients. These market rates can cover
the higher transaction costs of small loans and often include significant
risk premiums. The majority of microfinance providers that have significant
numbers of clients are profitable (i.e. financially sustainable), and are funded
by social and commercial investors not donor grants’ (ATISG, 2010: 6).
Helms (2006: 5) also underscores how microfinance ‘has demonstrated that
poor people are viable customers, created a number of strong institutions
focusing on poor people’s finance, and begun to attract the interest of private
investors’ (see also MasterCard Foundation, 2014: 5; UN, 2006: 9). But,
given that financial exclusion persists, the question arises: why is the business
potential of financial inclusion not fulfilled? Why do profit-oriented actors
not successfully ‘do’ inclusive finance with all poor people?
One explanation commonly put forward by financial inclusion advocates
(in contradiction of Portfolios of the Poor) is that many poor and low-income
people do not demand or know how to ‘properly’ use formal financial ser-
vices; they do not fully recognize what formal financial sectors offer them,
and how they must behave to benefit. For example, Deb and Kubzansky
(2013: ii, 2) argue there is a massive ‘financial capability gap’ which
Debate: Contesting Financial Inclusion 15

businesses should help to close, because ‘[w]ithout the skills and knowl-
edge to make informed financial choices, it can be difficult if not impossible
for low-income earners using financial products for the first time to under-
stand the full implications — including both the short-term and long-term
risks — of their choices and actions’. The G20 experts similarly claim: ‘[l]ow
levels of financial capability form a significant barrier . . . . With enhanced
financial capability, poor people will be able to understand basic financial
concepts, appreciate how newly available services can meet the needs cur-
rently filled via informal financial arrangements, and have the skills to apply
their knowledge’ (ATISG, 2010: 18).
One related problem for proponents of the business case is that the space
they seek to occupy is not always empty: smaller, informal or government
providers of financial services exist. Some authors are careful to not wholly
dismiss these as always irrelevant or harmful — particularly where they
serve clients who are too marginal to be of much interest for private-sector
operators (Ledgerwood and Gibson, 2013: 30) — but still take a position
that, the more formal and more private (that is: for-profit) a provider is,
the better. As Accion (2009: 1) very bluntly states: ‘Financial services are
delivered by a range of providers, most of them private’. The MasterCard
Foundation (2014: 4) notes, more subtly, that village-based savings groups
can satisfy basic needs but, ‘[w]hile these solutions work at a subsistence
level, their exclusion from the formal system makes them more susceptible to
risk’. Cull et al. (2014: 2) also opine: ‘At times, these informal mechanisms
represent important and viable value propositions. Often, however, they are
insufficient and unreliable, and they can be very expensive’. Even though
the G20 calls for ‘diversity’ in financial inclusion, it too mostly implies pri-
vate providers when it emphasizes that policy approaches should ‘promote
competition and provide market-based incentives for delivery of sustainable
financial access’ (GPFI, 2014: 13). The broad emphasis on competition as
a supposed driver of financial inclusion shows the conviction that private,
profit-seeking entities (which respond to competition) should take the lead:
‘As in any market, if improvement in access does not develop in a compet-
itive manner, benefits may be restricted. Clients with limited information
and/or choices may not be able to exert competitive pressure on providers to
improve services’ (Ledgerwood, 2013: 4). The UN, once again, represents
an outlier, conceding that ‘multiple providers of financial services . . . could
include any number of combinations of sound private, non-profit and public
providers’ (UN, 2006: 17).
Two further explanations are routinely offered for why financial inclusion
business opportunities as yet remain unrealized. The first is that information
asymmetries cause the market to fail: financial institutions do not trust or
know their (potential) clients well enough; the clients do not understand
the institutions well enough. While the latter is often deemed remediable
through education or capacity building, the former is discussed as a prob-
lem of adverse selection and moral hazard (Thingalaya et al., 2010: 26;
16 Philip Mader

UNCTAD 2014: 7; World Bank, 2014: 17–18). As the World Bank (2014:
17), for instance, argues, in credit markets ‘higher interest rates tend to at-
tract riskier borrowers (adverse selection) and change repayment incentives
(moral hazard)’. If true, the high prices poor people pay for financial services
do not mean that financial inclusion necessarily must be expensive or un-
profitable. Rather, they indicate that information gaps have driven a wedge
between supply and demand, which is to be removed with new technologies,
new policies and market infrastructures (such as credit bureaus).
A second common explanation given for the business opportunity remain-
ing unfulfilled is government failure: high documentation requirements cre-
ate obstacles (Allen et al., 2012: 13); regulation stifles innovation (ATISG,
2010: 1); price regulation and anti-competitive policies keep entrants out of
markets (World Bank, 2014: 47); and states compete unfairly by attempt-
ing to offer financial services themselves (Ehrbeck et al., 2012: 5; Helms,
2006: 141).13 To remedy such governmental sins against business efforts
to financially include the poor, according to the UN (2006: 6), ‘a change
in attitudes of government and other stakeholders may be required, along
with a greater appreciation of what inclusive financial sectors can deliver for
development’. Staschen and Nelson (2013: 73) even speak of the need to ‘ed-
ucate lawmakers’ in order ‘to overcome any potential resistance and create
a joint understanding of what is needed to achieve an enabling environment
for financial services for the poor’.
Several objections can be raised against these ‘market failure’ and ‘govern-
ment failure’ explanations of financial exclusion. First, Collins et al.’s (2009)
portrayal of poor people as savvy finance users suggests that clients are un-
likely to be unaware of the benefits of financial products, or incapable of using
them properly. Instead of poor and low-income people remaining financially
excluded because they mistrust formal institutions, it appears more likely that
many lack the savings or cash flows to make it worthwhile and profitable for
businesses to serve them — except through short-term, high-interest loans,
of the kind that MFIs provide. Second, high prices actually reflect transaction
costs, rather than just trust or information problems. The largely non-existent
business of microsavings services offers a case in point: because collecting
and administering tiny deposits is very expensive for MFIs, most MFIs pre-
fer to raise capital from banks, investors or donors (Mader, 2015: 33–34);
if they do offer savings services, MFIs usually provide these in conjunction
with loans, often as ‘forced savings’ (where borrowers must ‘deposit’ part
of the loan as security, and pay interest on the full loan amount).14 Third,
the widespread fixation of financial inclusion advocates on governments as
a hindrance is a distraction from all the policy support private finance al-
ready receives. Many different factors favour financial inclusion: a globally

13. As an outlier once again, the UN (2006: 18) points out that, historically, public financial
services programmes have sometimes been useful.
14. Sinclair (2012: 35–36, 92) details how MFIs pad their profit margins with this technique.
Debate: Contesting Financial Inclusion 17

liberalized international financial environment, structural adjustment

which expanded private credit provision, international capital markets flush
with funds, numerous governments which have declared financial inclusion
a policy priority, and the fact that regulation and competition from state
lenders has long been in retreat in many places.
However, there is another possible explanation for many financial in-
clusion authors’ fixation on government: what they seek, in reality, is for
governments to deliver the business for private financial companies. States
are increasingly called upon to go beyond deregulating markets, and demon-
strate their ‘broad-based government commitment to financial inclusion to
help alleviate poverty’ (ATISG, 2010: vii). They should provide ‘a sup-
portive environment [that] keeps the market in mind’ (Accion, 2009: 2).
Commonly-made demands on public bodies include delivering payment
infrastructure and credit bureaus (Ehrbeck et al., 2012), encouraging tech-
nology development and uptake (ATISG, 2010: 1), promoting clients’ fi-
nancial capability (Staschen and Nelson, 2013: 76–78), removing regulation
(UNCTAD, 2014: 17), and ensuring macroeconomic stability (Helms, 2006:
141). The World Bank, furthermore, calls on governments to channel their
welfare payments to citizens through financial service providers, because the
payments can become ‘a vehicle for extending financial inclusion’ (World
Bank, 2014: 98). ‘[T]he spectrum of social transfers, wages, and pension
payments’, Ehrbeck et al. (2012: 8) argue, should be used to drive transac-
tion volumes, bring more low-income individuals into the financial sector,
and lower the costs per transaction (see also Allen et al., 2012: 34; UNCTAD,
2014: 17).
The question is not whether there is a business case for financial in-
clusion — it has been vociferously argued — but whether it is credible.
From the present evidence, it remains unclear. Where private business has
engaged in financial inclusion, it generally has cherry-picked, offering se-
lected services (mainly high-interest loans) to selected clienteles (often the
urban, employed, less-poor), and even these ‘business models’ frequently
have taken initial or continual philanthropic and public-sector support.15
Despite many grand pronouncements about ‘fintech’, branchless banking,
mobile banking, or agent banking acting as the imminent drivers of financial
inclusion,16 the business case remains more speculative than certain. Under-
writing the current ‘tech’ optimism, that new technologies can dramatically
lower transaction costs and generate new data riches that resolve infor-
mation problems, is Kenya’s famous mobile payments service M-PESA.
But M-PESA’s broad take-up has proven difficult to replicate elsewhere
(see MasterCard Foundation, 2014: 5), and payments services may be more

15. Even in the microfinance business, only 23 per cent of institutions manage without subsidies
(D’Espallier et al., 2013).
16. See ATISG (2010: v); Helms (2006: 141, 222); Ledgerwood (2013: 2); UNCTAD (2014:
10).
18 Philip Mader

susceptible to technological breakthroughs than financial services generally.

Indeed, the potential of formal for-profit business models to be successful
in savings and insurance, which would be crucial for households coping
with shocks, is particularly uncertain, as Collins et al. (2009: 93), for in-
stance, concede: ‘commercially viable comprehensive health insurance to
poor households . . . would almost surely entail premium payments that
would be beyond the reach of even the best-off households’. In light of
current calls for heavy public investment, financial capability building, and
delegitimizing or removing other finance providers, it therefore appears that
the presumed business case for financial inclusion is really built on the ex-
pectation of interventions with public money to facilitate private profits.
Such demands upon states represent little less than a call on governments
to subordinate their social policies to the goal of financial sector expansion
(as documented for Brazil by Lavinas, this issue). If the business case does
depend on governments or donors, governments and donors might as well
do the job themselves.

CONCLUSION

This contribution has examined the turn from microfinance to financial

inclusion as an opening-up of financial dealings with poor people, to in-
clude new actors and practices, new ideas and ideologies, new theories of
change, and a renewed invitation to live by finance. It subsequently criti-
cally scrutinized the arguments made for financial inclusion: driving broader
development outcomes, bringing direct benefits to poor people, and making
good business sense. It has demonstrated that protagonists widely assume
financial inclusion to generate economic growth and development; but the
causal connection is unclear, and if there is one, it may be that growth
and development actually drive financial inclusion. It has also shown that
the assumption of poor people benefiting directly from financial inclusion
is weak; the impact literature cannot show transformative or even clearly
positive effects (unless improved money management, a diffuse sense of
inclusion, and expanded financial choices are the desired effects). Lastly,
it has argued that the business case for financial inclusion — the promise
that for-profit actors will deliver comprehensive services at decent quality
and affordable prices — is far weaker than normally presumed; worryingly,
although perhaps unsurprisingly, calls on governments have increased to
make their social policies serve the goal of financial inclusion, with the state
acting as handmaiden for financial businesses.
With this, the contribution confronts the prevailing orthodoxy that finan-
cial inclusion is a core pro-poor private-sector led development intervention
— it is neither clearly pro-poor, nor private-sector led, nor development —
and instead proposes it to be a contested and contestable enterprise of grant-
ing financial capital more power over markets and policy agendas. This is
Debate: Contesting Financial Inclusion 19

not in itself an argument against offering financial services to poor people,

especially to particular groups such as owners of high-potential enterprises,
but it is a rebuttal against the totalizing agenda that has painted financial
services as essential drivers of pro-poor ‘inclusion’. And by implication it is
an argument for policy makers to check their fiscal and political patronage
for financial inclusion, press for more solid (instead of speculative) evidence
for the developmental and poverty impacts, and give greater consideration
to alternative interventions for inclusive development. Finally, it is also a
reminder to learn lessons from the multiple disappointments with micro-
finance, which did not serve to alleviate (let alone eliminate) poverty, but
instead spearheaded a financialization of poverty to the advantage of rentier
capitalists and ‘social’ investors (Mader, 2015).
Going forward, four things should be noted. First, the evidence base for
(or against) financial inclusion needs to be strengthened, particularly regard-
ing the effects that financial expansion has on poor people and developing
societies. The current evidence–policy mismatch around financial inclusion
is strikingly similar to the one that has plagued microfinance. While expecta-
tions are high for financial inclusion to serve as a core pro-poor intervention
in the SDG era, they do not appear justified. Adherence to flimsy theories
about finance driving development and poverty alleviation bears the risk
of putting the proverbial cart before the horse, and at best addressing very
specific symptoms, rather than deeper causes, of poverty and underdevelop-
ment. Second, greater attention should be paid to the limitations and potential
downsides of financial inclusion: these might include insufficiently recog-
nized regressive effects, for instance if loans represent a significant financial
drain on borrower households’ finances (Mader, 2015), or if electronic pay-
ments systems bring redistribution from poorer households to wealthier
households (Schuh et al., 2010).
Third, the business-driven approach to financial inclusion should be crit-
ically re-examined, particularly vis-à-vis more social alternatives, such as
cooperatives, postal savings banks, or government lending programmes —
which exist, and at least in Europe historically have provided the greatest
impetus for popular access to financial services. In particular, governments
should not see their role as helping the private sector make money out of fi-
nancial services to the poor, while diverting public resources from important
uses like job creation or social care. If there is a business case for financial
inclusion, let businesses pursue it; if not, let governments and communities
pursue alternatives. Fourth, unless a much firmer evidence base in favour
of financial inclusion as a poverty-alleviation and development promotion
strategy emerges, policy makers, governments and philanthropists would
be well advised to prioritize more redistributive interventions. While finan-
cial inclusion and investments in more urgent areas of social provision like
healthcare or education are by no means mutually exclusive, in practice
opportunity costs do imply funds should be spent where clearer evidence of
beneficial impacts is ascertained.
20 Philip Mader

Financial inclusion, like microfinance, follows the fundamental premise

that development and poverty alleviation should be pursued through an
expansion of financial markets — a financialization of development and
poverty in the guise of inclusive development. But it is more than just a
relabelled version of microfinance. Financial inclusion is a thoroughly forti-
fied finance–development hybrid that looks poised to grant financial market
actors and rentier capital even greater powers to extract rents and reshape
politics, and subordinate social development to capital market development.
It also continues the recent descent down a slippery slope of the promises of
development being watered down from broad-based transformative change,
to merely mitigating symptoms of poverty, to increasingly just extending
services (for sale) to the poor as a goal in itself. This shifting of the goalposts
deserves to be contested and challenged in a far more clear-sighted debate
about the means and ends of development which must be, and always have
been, broader than just building markets.

REFERENCES

Accion (2009) ‘Financial Inclusion: What’s the Vision?’. Cambridge, MA: Center for Finan-
cial Inclusion, Accion International. https://centerforfinancialinclusionblog.files.wordpress.
com/2011/12/financial-inclusion-whats-the-vision.pdf (accessed 21 June 2016).
AFI (2015a) ‘Maya Declaration: Commitments You Can Bank On’. Alliance for Financial In-
clusion. www.afi-global.org/sites/default/files/publications/maya_factsheet_2015_final.pdf
(accessed 21 June 2017).
AFI (2015b) ‘Maya Declaration: Updated as of September 2015’. Alliance for Financial
Inclusion. www.afi-global.org/sites/default/files/publications/maya_declaration_2015.pdf
(accessed 21 June 2016).
Aghion, P. and P. Bolton (1997) ‘A Theory of Trickle-Down Growth and Development’, Review
of Economic Studies 64(2): 151–72.
Allen, F., A. Demirgüc-Kunt, L. Klapper and M. Soledad Martinez Peria (2012) ‘The Foun-
dations of Financial Inclusion: Understanding Ownership and Use of Formal Accounts’.
World Bank Policy Research Working Paper No. WPS6290. Washington, DC: World
Bank.
Arcand, J.L., E. Berkes and U. Panizza (2015) ‘Too Much Finance?’. Journal of Economic
Growth 20(2): 105–48.
Arnolds, J. and E. Rhyne (2016) ‘A Change in Behavior: Innovations in Financial Capabil-
ity’. Cambridge, MA: Center for Financial Inclusion, Accion International. https://centerfor
financialinclusionblog.files.wordpress.com/2016/04/a-change-in-behavior-final.pdf
ATISG (2010) ‘Innovative Financial Inclusion: Principles and Report on Innovative Financial
Inclusion from the Access through Innovation Sub-Group of the G20 Financial Inclusion
Experts Group’. Access through Innovation Sub-group, Microfinance Gateway. Washington,
DC: Consultative Group to Assist the Poor. www.microfinancegateway.org/sites/default/
files/mfg-en-paper-innovative-financial-inclusion-may-2010.pdf (accessed 21 June 2016).
Banerjee, A. and A. Newman (1993) ‘Occupational Choice and the Process of Development’,
Journal of Political Economy 101(2): 274–98.
Banerjee, A., E. Duflo, R. Glennerster and C. Kinnan (2015) ‘The Miracle of Microfinance?
Evidence from a Randomized Evaluation’, American Economic Journal: Applied Economics
7(1): 22–53.
Debate: Contesting Financial Inclusion 21

Banerjee, A., D. Karlan and J. Zinman (2015) ‘Six Randomized Evaluations of Microcredit:
Introduction and Further Steps’, American Economic Journal: Applied Economics 7(1):
1–21.
Bateman, M. (2012) ‘Let’s Not Kid Ourselves that Financial Inclusion Will Help the Poor’,
The Guardian Poverty Matters Blog 8 May. www.theguardian.com/global-development/
poverty-matters/2012/may/08/financial-inclusion-poor-microfinance (accessed 21 January
2016).
Bateman, M. and H-J. Chang (2012) ‘Microfinance and the Illusion of Development: From
Hubris to Nemesis in Thirty Years’, World Social and Economic Review 1: 13–36.
Beck, T., A. Demirgüc-Kunt and R. Levine (2007) ‘Finance, Inequality and the Poor’, Journal
of Economic Growth 12(1): 27–49.
Carlberg, T., Y. Lien, M. Gomez, A. Nayar, J. Dougherty, A. Gugelev and E. Boll (2016) ‘Small
Merchants, Big Opportunity: The Forgotten Path to Financial Inclusion’. Dalberg Global
Development Advisors and Global Development Incubator. www.dalberg.com/system/
files/2017-07/Small-merchants-big-opportunity.pdf
Collins, D., J. Morduch, S. Rutherford and O. Ruthven (2009) Portfolios of the Poor: How the
World’s Poor Live on $2 a Day. Princeton, NJ: Princeton University Press.
Cull, R., A. Demirgüç-Kunt and J. Morduch (eds) (2013) Banking the World: Empirical Foun-
dations of Financial Inclusion. Cambridge: MIT Press.
Cull, R., T. Ehrbeck and N. Holle (2014) ‘Financial Inclusion and Development: Recent Impact
Evidence’. CGAP Focus Note 92. Washington, DC: Consultative Group to Assist the Poor.
Deb, A. and M. Kubzansky (2013) ‘Bridging the Gap: The Business Case for Financial Capa-
bility’. Citi Foundation. www.citifoundation.com/citi/foundation/pdf/bridging_the_gap.pdf
(accessed 21 June 2016).
Demirgüc-Kunt, A., L. Klapper and D. Singer (2017) ‘Financial Inclusion and Inclusive Growth:
A Review of Recent Empirical Evidence’. Policy Research Working Paper No. 8040.
Washington, DC: World Bank.
D’Espallier, B., M. Hudon and A. Szafarz (2013) ‘Unsubsidized Microfinance Institutions’,
Economics Letters 120(2): 174–76.
Dupas, P. and J. Robinson (2013) ‘Why Don’t the Poor Save More? Evidence from Health
Savings Experiments’, American Economic Review 103(4): 1138–71.
Duvendack, M., R. Palmer-Jones, J.G. Copestake, L. Hooper, Y. Loke and N. Rao (2011)
Systematic Review. What is the Evidence of the Impact of Microfinance on the Well-
Being of Poor People? London: EPPI-Centre, Social Science Research Unit, Insti-
tute of Education, University of London. https://assets.publishing.service.gov.uk/media/
57a08aeeed915d622c0009bb/Microfinance2011Duvendackreport.pdf
The Economist (2014) ‘Poor Service: Tiny Loans are Getting more Expensive’, The Economist
1 February.
Ehrbeck, T., M. Pickens and M. Tarazi (2012) ‘Financially Inclusive Ecosystems: The Roles of
Government Today’. CGAP Focus Note 76. Washington, DC: Consultative Group to Assist
the Poor.
Fraser, N. (2009) ‘Feminism, Capitalism, and the Cunning of History’, New Left Review 56
(March–April): 97–117.
Gabor, D. and S. Brooks (2016) ‘The Digital Revolution in Financial Inclusion: International
Development in the Fintech Era’, New Political Economy 22(4): 423–36.
Galor, O. and J. Zeira (1993) ‘Income Distribution and Macroeconomics’, Review of Economic
Studies 60(1): 35–52.
Giné, X., D. Karlan and J. Zinman (2010) ‘Put Your Money Where Your Butt Is: A Commitment
Contract for Smoking Cessation’, American Economic Journal: Applied Economics 2(4):
213–35.
GPFI (2014) ‘2014 Financial Inclusion Action Plan’. Global Partnership for Financial Inclusion
2 September. http://gpfi.org/sites/default/files/documents/2014_g20_financial_inclusion_
action_plan.pdf (accessed 21 June 2016).
22 Philip Mader

Graeber, D. (2011) Debt: The First 5,000 Years. New York: Melville House.
Guérin, I., M. Labie and J. Servet (2015) The Crises of Microcredit. London: Zed Books.
Hannig, A. (2013) ‘A Declaration for Financial Inclusion’, in C. Hill-Kelly (ed.) ‘G20 Rus-
sia 2013’, pp. 44–45. London: Intrinsic Communications. www.joomag.com/Frontend/
WebService/downloadPDF.php?UID = 0196335001491247056 (accessed 19 October
2017).
Helms, B. (2006) Access for All: Building Inclusive Financial Systems. Washington, DC: World
Bank.
Hickey, S. and A. du Toit (2013) ‘Adverse Incorporation, Social Exclusion, and Chronic Poverty’,
in A. Shepherd and J. Brunt (eds) Chronic Poverty: Concepts, Causes and Policy, pp. 134–59.
Basingstoke: Palgrave Macmillan.
Jalilian, J. and C. Kirkpatrick (2005) ‘Does Financial Development Contribute to Poverty Re-
duction?’, Journal of Development Studies 41(4): 636–56.
Karim, L. (2011) Microfinance and its Discontents: Women in Debt in Bangladesh. Minneapolis,
MN: University of Minnesota Press.
King, R. and R. Levine (1993) ‘Finance and Growth: Schumpeter Might be Right’, Quarterly
Journal of Economics 108(3): 717–37.
Ledgerwood, J. (ed.) (2013) The New Microfinance Handbook: A Financial Market System
Perspective. Washington, DC: World Bank.
Ledgerwood, J. and A. Gibson (2013) ‘The Evolving Financial Landscape’, in J. Ledgerwood
(ed.) The New Microfinance Handbook: A Financial Market System Perspective, pp. 15–48.
Washington, DC: World Bank.
Mader, P. (2015) The Political Economy of Microfinance: Financialising Poverty. Basingstoke
and New York: Palgrave Macmillan.
Mader, P. (2016) ‘Questioning Three Fundamental Assumptions in Financial Inclusion’.
IDS Evidence Report 176. Brighton: Institute of Development Studies, University of
Sussex.
Martin, R. (2002) The Financialization of Daily Life. Philadelphia, PA: Temple University Press.
MasterCard Foundation (2014) ‘The MasterCard Foundation Symposium on Financial Inclusion
2014 with the Boulder Institute of Microfinance: Post-Symposium Report’. Toronto: Master-
card Foundation. http://mastercardfdnsymposium.org/2014symposiumreport/ (accessed 21
June 2016).
McKee, K., E. Lahaye and A. Koning (2011) ‘Responsible Finance: Putting Principles to Work’.
CGAP Focus Note 73. Washington, DC: Consultative Group to Assist the Poor.
Meagher, K. (2015) ‘Leaving No One Behind? Informal Economies, Economic Inclusion and
Islamic Extremism in Nigeria’, Journal of International Development 27(6): 835–55.
Rankin, K. (2013) ‘A Critical Geography of Poverty Finance’, Third World Quarterly 34(4):
547–68.
Roodman, D. (2012) ‘Think Again: Microfinance’, Foreign Policy 1 February. www.foreign
policy.com/articles/2012/02/01/think_again_microfinance (accessed 21 June 2017).
Roy, A. (2010) Poverty Capital: Microfinance and the Making of Development. New York:
Routledge.
Rutherford, S. (2000) ‘Raising the Curtain on the “Microfinancial Services Era”’. CGAP Focus
15. Washington, DC: Consultative Group to Assist the Poor.
Sarma, M. and J. Pais (2011) ‘Financial Inclusion and Development’, Journal of International
Development 23(5): 613–28.
Schuh, S., O. Shy and J. Stavins (2010) ‘Who Gains and Who Loses from Credit Card Payments?’.
Public Policy Discussion Papers 10-03. Boston, MA: Consumer Payments Research Center.
Sinclair, H. (2012) Confessions of a Microfinance Heretic: How Microlending Lost its Way and
Betrayed the Poor. San Francisco CA: Berrett-Koehler.
Staschen, S. and C. Nelson (2013) ‘The Role of Government and Industry in Financial Inclu-
sion’, in J. Ledgerwood (ed.) The New Microfinance Handbook: A Financial Market System
Perspective, pp. 71–96. Washington, DC: World Bank.
Debate: Contesting Financial Inclusion 23

Stewart, R. et al. (2012) ‘Do Micro-credit, Micro-savings and Micro-leasing Serve as Effective
Financial Inclusion Interventions Enabling Poor People, and Especially Women, to Engage in
Meaningful Economic Opportunities in Low- and Middle-income Countries? A Systematic
Review of the Evidence’. Technical Report. London: EPPI-Centre, Social Science Research
Unit, University of London.
Teki, S. and R.K. Mishra (2012) Microfinance & Financial Inclusion. New Delhi: Academic
Foundation.
Thingalaya, N.K., M.S. Moodithaya and N.S. Shetty (2010) Financial Inclusion and Beyond:
Issues and Challenges. New Delhi: Academic Foundation.
Triki, T. and I. Faye (2013) Financial Inclusion in Africa. Tunis: African Development Bank.
UN (2006) ‘Building Inclusive Financial Sectors for Development’. Joint Report by the United
Nations Department of Economic and Social Affairs and the United Nations Capital Devel-
opment Fund. New York: United Nations.
UNCTAD (2014) ‘Impact of Access to Financial Services, Including by Highlighting Remit-
tances on Development: Economic Empowerment of Women and Youth’. Geneva: United
Nations Conference on Trade and Development.
WEF (2017) The Inclusive Growth and Development Report 2017. Geneva: World Economic
Forum.
World Bank (2014) Global Financial Development Report 2014: Financial Inclusion. Washing-
ton, DC: World Bank.
Yunus, M. (1997) ‘Microcredit Summit Opening Plenary: Opening Speech by Muham-
mad Yunus, Washington, February 2, 1997’. Grameen Bank. www.grameen.com/opening-
plenary/ (accessed 19 October 2017).

Philip Mader ([email protected]) is a Research Fellow at the Institute of

Development Studies (IDS) in Brighton, UK. He has published The Political
Economy of Microfinance (Palgrave, 2015) and is one of three editors of the
Routledge International Handbook of Financialization (under preparation,
expected 2019).