Abstract
The research was financed by ESADE Business School (Sponsoring the researcher in his PhD studies)' Abstract There is growing evidence that microfinance institutions (MFIs) have substantial benefits for consumers, especially women in financial inclusion. Several attempts have been made to explain why MFIs have not been able to bridge to financial inclusion. Prior research has addressed the reasons why globally; two-thirds of adults do not have an account. However, little is known about the role of financial education that leads to financial literacy especially regarding the method, mode, form and subject. This study proposes Global Financial Education (GFE)that would lead to financial literacy among MFI clients in order to empower them to select appropriate MFIs, MFI products and services, right channels for greater financial inclusion. We propose a practical mode of implementing GFE. This is likely to propel financial inclusion as opposed to merely access to credit through informal financial institutions where clients are caught in a vicious cycle of poverty, unable to transition to middle class status. Keywords : Financial Inclusion; Financial Literacy; Global Financial Education; Micro-Financial Institutions; DOI : 10.7176/JPID/55-05 Publication date :August 31st 2020
Highlights
Microfinance industry has grown sustainably over the past two decades with the goal of helping reduce if not eradicate poverty (UFA2020)
A few years ago, Consultative Group to Assist the Poor (CGAP) research identified well over 750 million savings and loan accounts in institutions that cater to the lower economic strata; 74 percent of these were in state-owned savings, development, and postal banks
We introduce the novel concept of Global Financial Education (GFE) and define and explain the two main research questions of this study
Summary
Microfinance industry has grown sustainably over the past two decades with the goal of helping reduce if not eradicate poverty (UFA2020). From the emergence of micro-credit reaching large numbers of people to advancement from microcredit into microfinance into the concept of building entire financial systems that serve the poor and low-income populations—financial systems that are “inclusive (Helms, Littlefield, & Porteous, 2015).”. This new, more ambitious and complex vision captured the attention of governments, international financial institutions, philanthropists, social investors, mainstream bankers, and even some royalty and celebrities (Helms et al, 2015). A few years ago, CGAP research identified well over 750 million savings and loan accounts in institutions that cater to the lower economic strata; 74 percent of these were in state-owned savings, development, and postal banks. A second study by Peachy and Roe identified over 1.4 billion accessible (low average balance, low-cost) accounts in developing and transition economies (Helms et al, 2015)
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