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Financial Exclusion and Inclusive Finance
He Dexu and Miao Wenlong
Institute of Finance and Banking, Chinese Academy of Social Sciences (CASS), Beijing, China
Institute of Quantitative and Technical Economics, CASS; Xi’an Branch of People’s Bank of China (PBoC), Xi’an, China
Abstract: Inclusive finance is intended to address the barriers posed by financial
exclusion to economic development. Therefore, an effective inclusive financial system must
be designed to address financial exclusion rather than to provide long-term policy subsidies
for financial relief. Financial exclusion in China has causes in economic development
strategy, financial institutional arrangement, financial market structure, dominance of social
relations, and constraints of risk evaluation. Eliminating financial exclusion and increasing
financial inclusion essentially requires that our financial system be equipped with those
functions through policy adjustment, institutional innovation and improvement of market
rules. Existing bottlenecks of financial risk management should be eliminated to provide fair
opportunities of financing for projects that contribute to social development with limited
deviations from traditional credit costs. Inclusive finance is sometimes confused with policy
subsidies, financial assistance and poverty relief loans, which cannot reflect efficiency,
fairness and inclusion as the essential attributes of inclusive finance. The existing financial
system must be adjusted to enhance risk management performance and advance financial
market stratification and competition by creating fair and efficient legal and credit systems.
Keywords: financial exclusion, financial inclusion, inclusive finance
JEL Classification: G28
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