World Bank urges financial inclusion as growth falters in Europe and Central Asia

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You argue in your latest report that the entire region faces formidable long-term challenges, but suggest as one possible remedy that governments should focus on increasing what you call financial inclusion. Can you elaborate what you mean by financial inclusion?

Financial inclusion is the ability of individuals to access and use financial services in a country. It is a very important driver of growth and poverty alleviation. Because without proper access to financial services, people cannot invest in their health, their education and they cannot take advantage of promising business opportunities. And when they are faced with shocks they cannot manage risks. And we look at having a bank account as the marker of financial inclusion because that’s the first formal step into the financial system.

All those things are extremely important in ensuring that there is growth and that there is no persistent income inequality. But I think sometimes there isn’t as much recognition about how important it is to have an inclusion financial system for promoting growth and poverty alleviation and that’s why we focus on this issue.

And for the Europe and Central Asia region financial inclusion is very important. Although there has been significant growth, there is still potential and there also is quite a degree of variation across the different countries.

What segments of the population in that region could most profit from efforts focused on financial inclusion?

Worldwide in developing countries the gender gap between men and women is about nine percentage points. In the region, one country stands out: Turkey. It has a gender gap of almost 30 percentage points. A lot more men have bank accounts than women.

And when you look at income differences there is a big gap as well. When you look at the differences in account ownership between the poorest 40% and the richest 60% globally it is about 15 percentage points on average around the world for developing countries. In Romania, that difference is 33 percentage points. There is a wide disparity in some of the ECA countries in terms of how account ownership varies between poorer and richer individuals.

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