Does access to financial services increase financial inclusion?

Previous research has argued that more access to formal financial services increases people’s financial inclusion. Using multilevel models fitted to data from the Global Financial Inclusion Survey (Global Findex) for 147 countries and over 152, 000 individuals, this paper substantially disqualifies this argument. Results show that while individuals are more likely to be financially included in countries with higher geographical outreach of financial services, this association does not hold when controls for the effect of socio-economic, institutional and policy context are introduced into the analysis. This study finds empirical support for the role of ICT infrastructure, rule of law and policy intervention in enhancing financial inclusion. In addition, interaction effects between polices to foster financial inclusion and individual characteristics suggest that the use of bank accounts for government payments is especially effective among low-income and less educated individuals, and that the practice of corresponding banking have a positive effect among women.