Impact of financial inclusion in low‐ and middle‐income countries: A systematic review of reviews. International Development, Methods.

Abstract

Financial inclusion is presently one of the most widely recognised areas of activity in international development. Financial inclusion initiatives have built upon donors’ experience with microfinance, but have displaced and superseded microfinance interventions in recent years with a more encompassing agenda of financial services for poverty alleviation and development. With financial inclusion, policymakers and donors hope that access to financial services (including credit, savings, insurance and money transfers) provided by a variety of financial service providers, of which microfinance institutions (MFIs) are a subset, will allow poor and low-income households in low- and middle-income countries to enhance their welfare, grasp opportunities, mitigate shocks, and ultimately escape poverty. Another hope is that increased access to financial services will advance macroeconomic development, which is also expected to benefit poor/low-income households. More recently, some donors have suggested behavioural changes (such as household spending decisions) to be desired outcomes of access to financial services, as well. Unlike most previous systematic reviews, which focused on microfinance interventions (or subsets thereof), we explicitly adopt a broader scope to review any available systematic review and or meta-analysis evidence on financial inclusion as a whole field.

Systematic reviews and meta-analyses (in short: meta-studies) have sought to clarify the impacts from financial inclusion on poor people in low- and middle-income countries, based on an array of different underlying studies which include quantitative and qualitative work based on long-term and short-term data. The bulk of these meta-studies have focused on microfinance, and many specifically on microcredit. The very different quality and approaches of these meta-studies, and of the studies underlying them, however, pose a major challenge for policymakers, programme managers and practitioners in assessing the benefits and drawbacks of finance-based approaches to poverty alleviation. Increasingly there is confusion about the impacts, and a risk of “cherry picking” among different findings. Further, many meta-studies are not taking into account what is missing from their primary studies, which would affect an understanding of the evidence, for example when not analysing or reporting gendered impacts. More recently, primary studies have also sought to understand the impacts of financial inclusion initiatives more broadly, but the systematic review evidence has not yet progressed as far as for microfinance.