What is Financial Inclusion? A Critical Review

Financial inclusion (FI) has become a key policy for poverty reduction in developing countries. However, there is no consensus on what FI comprises, who should be included, and who will deliver this inclusion. The different interpretations may lead to implementations that do not correspond to the original intent. To provide a consistent definition of FI in the existing literature, this article reviews sixty-nine studies about FI. Built on the systematic review approach, studies are selected based on inclusion and exclusion criteria, as well as an explicit search strategy, thus providing a reliable and replicable outcome. After identifying the studies, we present a critical discussion about the underlying theoretical and empirical implications of the definitions of FI. We find that by making certain assumptions implicit, FI may be a policy that merely replicates microfinance initiatives. To overcome this issue, a new definition is suggested to highlight the policy’s underlying assumptions and objectives.