Financial inclusion, microfinance, and financial education in Latin America

Abstract

This chapter takes stock of the current state of financial inclusion in Latin America and discusses recent developments including innovations, branch expansions, and banks’ use of agent networks to further extend their reach. On the one hand, the chapter documents that Latin America has made substantial progress in terms of inclusion thanks to cases that have demonstrated the importance of strategies targeting households and firms previously ignored by traditional banks. On the other hand, the chapter emphasizes that important barriers to financial inclusion persist, with several countries in the region exhibiting within-country gaps and gaps to not only the advanced economies but also other peer developing ones. Technological innovation is playing a crucial role closing the gaps that currently characterize the region. Finally, the chapter suggests that to develop a stable financial system with responsible consumers, the ongoing progress in inclusion needs to go together with financial education.