Policy Principles for Expanding Financial Access

Principles for policymakers to enhance financial inclusion
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This report outlines principles to help financial sector policymakers deal with expanding financial access, regulating financial service providers (FSPs), and avoiding distortions when public resources are used to provide financial services.

Many low-income households and small enterprises remain excluded from access to many financial services, especially in developing countries. A growing number of FSPs have joined MFIs in extending their range of products and services to this segment.

The paper states increasing access to appropriate financial services can help the poor escape from poverty, especially at a time when the focus is on financial sector policy and regulatory tightening. It proposes the following ten principles for financial sector policymakers:

  • Promoting entry and competition among FSPs;
  • Building legal and information institutions and hard infrastructure;
  • Stimulating informed demand;
  • Ensuring safety and soundness of FSPs;
  • Protecting low-income and small customers against abuse by FSPs;
  • Ensuring usury laws, if used, are effective;
  • Enhancing cross-regulatory agency cooperation;
  • Balancing Government'’s role with market financial service provision;
  • Using subsidies and taxes effectively and efficiently;
  • Ensuring data collection, monitoring and evaluation.