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n AfricaGrowth Agenda - Aggregate savings and financial inclusion : lessons for developing African economies

Volume 2016, Issue 07
  • ISSN : 1811-5187

Abstract

We examine the relationship between aggregate savings and financial inclusion in developing countries. Through a review of the literature, we advance the hypothesis that financial inclusion policies are likely more successful in countries with a higher propensity to save (higher savings pool) than in countries with lower savings pool. We argue that because higher aggregate savings enable accumulation of loanable funds, households and SMEs can tap into such a pool to participate more meaningfully in welfare enhancement and incremental production. Similarly, countries with large aggregate savings, and their attendant large pool of loanable funds, should enable more financial inclusion for households; and in turn, enable access to quality education, effective healthcare and overall better quality of life, mainly via consumption smoothing. Finally, we point to possible ways of mobilizing the savings needed to enable effective financial inclusion.

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/content/afgrow/2016/07/EJC194236
2016-07-01
2019-10-13

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