Abstract
Financial inclusion is a topic of growing interest to researchers and policymakers, while creating a sustainable, just, and inclusive world where no one is left behind is a top priority in current times. The aim of this study is to provide a systematic review of the literature on the effect of financial inclusion on sustainable development goals, specifically to understand the effect of financial inclusion on Goals 1 (eradicate poverty), 2 (eradicate hunger), 4 (quality education), 5 (gender equality), 7 (renewable energy), 8 (jobs and economic growth), 10 (reduce inequalities), and 13 (climate action). The study concludes that there is a lot of evidence to show that financial inclusion is the primary tool for achieving the Sustainable Development Goals. In addition, the authors note that there is a scarcity of studies linking financial inclusion to the quality of education, health, and the eradication of hunger; in contrast, there is a fairly large body of scientific evidence confirming the beneficial effect of inclusion on economic growth, poverty reduction, gender equality, and income.
Top1. Introduction
Policymakers around the world believe that a more sustainable, just, and inclusive world can be achieved by complying with the seventeen (17) measures defined by the United Nations in 2015 and aimed at being achieved by 2030 (Emara & El Said, 2021; Kebede et al., 2023; Kien et al., 2023; Ouechtati, 2022). Problems related to poverty, hunger, health, education, gender equality, clean energy consumption, economic growth and inequality are mainly constrained by the income of families and companies, which can be reversed through financial inclusion (Chinoda & Kapingura, 2023; Dienillah et al., 2018; Gaganis et al., 2021; Omar & Inaba, 2020; Viitasalo et al., 2023; Zhang & Posso, 2017, 2019).
Financial inclusion is generally defined as how households and companies can access and use financial products and services in a safe, regulated environment (Demirgüç-Kunt et al., 2022; Ifediora et al., 2022; Kumar et al., 2021), so constraints linked to income and other social conditions must be eliminated for financial inclusion to be more effective (Aduda & Kalunda, 2012; Compaoré, 2022). In short, financial inclusion should be pronounced by equal opportunity and equal access to financial services and products (Al-eitan et al., 2022) and it is also important that the costs associated with access to financial products and services are reasonable and transparent (Domeher et al., 2022). It was in the early 2000s that financial inclusion began to receive due attention from academics and policymakers (Kumar et al., 2021; Sethy & Goyari, 2022), however, it is now impossible to talk about economic or social development without thinking about financial inclusion (Ifediora et al., 2022).
The selection of a measure of financial inclusion often raises several debates among academics (Compaoré, 2022), given that it is a multidimensional concept, made up of aspects that are easily captured and measured and unobservable characteristics. Researchers aggregate the financial inclusion indicator into two fundamental dimensions, specifically the supply side and the demand side of financial products and services (Anarfo et al., 2019; Jungo et al., 2021, 2022; Koomson et al., 2021; Ofoeda et al., 2022). For the supply side, we find indicators such as the number of bank branches per 1,000 km2 and per 100,000 adults, the number of ATMs per 1,000 km2 and per 100,000 adults, the number of life insurance policies per 1,000 adults, and the number of bank accounts per 100,000 adults. For the demand side, we have indicators such as total deposits in commercial banks per 100,000 adults, number of borrowers in commercial banks per 100,000 adults, savings as a percentage of gross domestic product (GDP), credit granted by commercial banks as a percentage of GDP (Huang & Zhang, 2020; Hung, 2016; Jungo et al., 2021; Ofoeda et al., 2022; Viitasalo et al., 2023). Within these dimensions, the geographic and demographic penetrations of financial inclusion are also characterized, with geographic penetration being associated with the expansion of financial services and products in the geographic space and demographic penetration being the distribution of financial products and services according to the composition of the population (Anarfo et al., 2019; Elsherif, 2019).
Key Terms in this Chapter
Inclusive Finance: Often confused with the microfinance, are financial services and products destined to aid low-income populations. It is a word that is on one hand more global because it regroups all the activities linked to the financial sector, but it is also more precise because it clearly indicates its objective: to include the whole population in the economic system.
Energy Transition: Energy transition refers to the global energy sector’s shift from fossil-based systems of energy production and consumption—including oil, natural gas and coal—to renewable energy sources like wind and solar, as well as lithium-ion batteries.
Economic Inequalities: Economic inequality refers to disparities among individuals' incomes and wealth. And those differences can be great.
Economic Growth: Economic growth is an increase in the production of economic goods and services in one period compared with a previous period. It can be measured in nominal or real (adjusted to remove inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes used.
Poverty: A state or condition in which a person or community lacks the financial resources and essentials for a minimum standard of living. Poverty-stricken people and families might go without proper housing, clean water, healthy food, and medical attention.
Financial Inclusion: Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses, regardless of their personal net worth or company size. Financial inclusion strives to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives.
Sustainable Development Goals: The Sustainable Development Goals (SDGs), 17 in total, also known as the Global Goals, were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.