Financial inclusion literature review: definition, measurement, and challenges

The financial sector is considered a crucial factor in facilitating economic growth directly through widening access to finance and indirectly contributing to the financial inclusion. The concept of financial inclusion is being constantly developed in academic discourse and EU policy though there is no global definition of financial inclusion. Existing literature on financial inclusion uses varying definitions. Many studies define the concept in terms of financial exclusion, which relates to the broader context of social inclusion while others define financial inclusion. The chapter aims to provider a review of the academic literature on the definition and measurement of financial inclusion in order to describe the main challenges to financial inclusion. The study highlights how financial inclusion and the development of the financial sector can generate various opportunities in terms of economic growth and poverty reduction. This highlights the existence of the strong link between well-functioning financial system and inclusive growth.