Mobile money outlet in Uganda. Mobile banking is how most Ugandans send, receive and bank money. By Ndiwulira (Own work) [CC BY-SA 4.0 (], via Wikimedia Commons

YES! topic 2018

Promoting Financial Inclusion: New Policies and Technological Innovations through Digital Finance

by Helke Seitz and Tim Kaiser, researchers at DIW Berlin – German Institute for Economic Research

Selected by Berlin International School Team II

Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services. Lack of financial inclusion exists around the world, although it is more pronounced in poorer countries. A functioning financial system accessible to the entire national economy and all its groups is an essential precondition for economic development. Hence, a lack of financial inclusion is not only a social issue; it is also an economic one.

Financial inclusion means something different at each stage of an economy’s development. While in developing countries, the access to financial services can be seen as a crucial criterion, the appropriate use of financial services is a somewhat more appropriate criterion in advanced economies.

A significant share of people in developing countries does not have access to financial services. The most basic indicator for financial inclusion has a bank account. Barriers are for example that financial services are not yet affordable, distance from a financial service provider, lack of necessary documentation papers, lack of trust in financial service providers. Within developing countries are groups who more than others lack access to financial services such as women (compared to men) or microbusinesses/own-account worker (compared to large companies).

In advanced economies, most people have access to financial services; their appropriate use is a much more important consideration than it is in developing countries.

How can access to financial services (financial inclusion) be increased (in advanced economies, Germany, developing countries)? Which institution(s) should be part of that process? Which factors determine financial inclusion? What is the impact of financial education or financial infrastructure? How can digital innovation (mobile money) influence financial inclusion?


Videos: (Wallstreet Journal: What is financial inclusion?)


Grohmann, A. und Menkhoff, L. (2017). Finanzbildung fördert finanzielle Inklusion in armen und reichen Ländern. DIW Wochenbericht 41/2017: 905-913.

Grohmann, A. (2016). Gender Gap in der finanziellen Bildung: Einkommen, Bildung und Erfahrung erklären ihn nur zum Teil. DIW Wochenbericht 46 / 2016: 1083-1090.

Hastings, J. S., Madrian, B. C., & Skimmyhorn, W. L. (2013). Financial Literacy, Financial Education, and Economic Outcomes. Annual Review of Economics 5: 347–373.

Kaiser,T. and Menkhoff, L. (2017). Does financial education impact financial literacy and financial behavior, and if so, when? World Bank Economic Review 31(3): 611-630

Levine, R. (1997). Financial development and economic growth: Views and agenda. Journal of Economic Literature, 35(2), 688–726.

Lusardi, A., and Mitchell, O. S. (2014). The Economic Importance of Financial Literacy: Theory and Evidence. Journal of Economic Literature, 52(1): 5–44.

Suri, T., & Jack, W. (2016). The long-run poverty and gender impacts of mobile money. Science, 354(6317),1288–1292.

Helke Seitz

Helke Seitz is a research associate at the German Institute for Economic Research (DIW Berlin) in the Department of International Economics and a PhD Student at the University of Hannover. Her research interests are in the field of development and labour economics. In her current project, Helke studies the financial behaviour of micro and small business owner in Uganda and is the project coordinator of the field work.

Institution: DIW – German Institute for Economic Research

YES! Participations: 2018


Tim Kaiser

Tim Kaiser holds a junior professorship in Economics and Economic Education at the University of Koblenz-Landau and is a research associate at the Department of International Economics at DIW Berlin. His current research focuses on experimental impact evaluations of financial education interventions in developing countries, as well as evaluations of economic education in schools in OECD countries.

Institution: DIW – German Institute for Economic Research

YES! Participations: 2018