Measuring Financial Inclusion: Explaining Variation in Use of Financial Services across and within Countries

This paper summarizes the user-side data set of indicators that measure how adults in 148 countries save, borrow, make payments, and manage risk. It uses publicly available data to benchmark financial inclusion- the share of the population that uses formal financial services in countries around the world. It also uses the data to investigate the significant country- and individual-level variation in how adults use formal and informal financial systems to manage their day-to-day finances and plan for the future. With regard to unbanked adults, the paper documents reported barriers to account use, such as cost, distance, and documentation requirements, which may shed light on potential market failures and provide guidance to policymakers in shaping financial inclusion policies. The paper discusses the following in detail:

• How patterns of financial inclusion vary across countries at different levels of income per capita, and within countries at different levels of relative income;
• Examine the barriers to financial inclusion and documents the relationship between subjective and objective barriers to access;
• Discuss examples of public and private sector led initiatives in the realm of financial inclusion and how better data can inform policymakers in shaping financial inclusion policies.