Public Good Theory of Financial Inclusion

Financial inclusion as a public good can be funded by the State and private firms to ensure that everyone has affordable access to formal financial services. Historically, the economic solution for financial inclusion has been to create public banks and issue banking license to private banks. Today, the solution for financial inclusion lies in offering public support to financial service providers to ensure that formal financial services is available and affordable so that everyone can access and use financial services to meet their needs. This article discusses the need to treat financial inclusion as a public good because financial inclusion is essential for the economic and social development of any nation. This article presents a detailed understanding of the public good theory of financial inclusion. It explains the sense in which financial inclusion is a public good and it explores the implications for development policy.