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Financial Inclusion: A Key Factor in Boosting Economic Growth

A recent survey conducted by the Financial Regulatory Commission and the National Research and Consulting Centre in Mongolia has shed light on the country’s financial inclusion landscape. The findings suggest that only 1.4% of respondents did not have a bank account due to a lack of documentation, while other reasons accounted for nearly 40% of those who were unbanked.

Barriers to Financial Inclusion

  • 9.9% of respondents preferred to have a shared account
  • 19.7% lacked sufficient resources
  • 11.3% did not have the necessary documents
  • 18.3% of respondents were above the legal age of 18 but still did not have access to financial services

A similar survey conducted in Paraguay in 2013 found that 42% of adults were excluded from the formal financial system, with the majority being low-income individuals who lacked national IDs and proof of income or employment. The main barriers to financial inclusion in Paraguay included:

  • A lack of money (51%)
  • Documentation (24%)

The World Bank’s Global Findex Database 2021 revealed that only 27% of Paraguayan adults had an account with a financial institution, a decline from 31% in 2017. However, mobile money accounts showed an increase from 29% to 38%.

Fighting Financial Inclusion

To address these issues, countries like Mongolia and Paraguay are taking steps to enhance their anti-money laundering (AML) and combating the financing of terrorism (CFT) frameworks. Mongolia’s exceptional progress in exiting the FATF grey list has been recognized globally.

The Central Bank of Sri Lanka has also undertaken a National Financial Inclusion Survey 2018-19 to identify obstacles towards improving financial inclusion in the country.

Conclusion

Financial inclusion is a crucial factor in boosting economic growth and reducing poverty. By addressing the barriers to financial inclusion, countries can provide their citizens with access to essential services such as savings accounts, loans, and insurance. As Mongolia and Paraguay continue to work on enhancing their financial systems, it is hoped that more individuals will have access to these vital services.

Sources

  1. Financial Regulatory Commission and National Research and Consulting Centre (2022). National Financial Inclusion Survey.
  2. World Bank (2014). National Financial Inclusion Strategy 2014-2018 of Paraguay.
  3. Central Bank of Sri Lanka (2019). National Financial Inclusion Survey 2018-19.
  • “Mongolia Exits FATF Grey List, A Major Achievement in Fight Against Money Laundering”
  • “Paraguay’s Financial Inclusion Strategy: A Step Towards Reducing Poverty”
  • “Sri Lanka’s Financial Inclusion Efforts: A Path Towards Economic Growth”