The Mediating Role of Financial Inclusion in Sustainable Growth

Pierre Dubois^*
*Correspondence: Pierre Dubois, Department of Business Administration, University of Camerino, 62032 Camerino, Italy, Email:

Introduction

Financial inclusion is a critical component of modern economic development, particularly in developing economies where large portions of the population remain excluded from formal financial systems. This exclusion often limits individuals' access to essential services such as savings accounts, loans, insurance and credit, hampering their ability to participate in the economy and improve their lives. As economies strive for sustainable growth, which balances economic progress, social inclusion and environmental stewardship, financial inclusion plays a pivotal role in mediating this process.

It ensures that marginalized communities, small businesses and individuals have the necessary tools to build wealth, reduce poverty and engage in productive economic activities. Financial inclusion not only drives personal financial empowerment but also strengthens the broader economy by promoting entrepreneurship, reducing inequality and contributing to long-term, sustainable development. This essay will explore how financial inclusion acts as a mediator for sustainable growth, discussing its role in poverty reduction, economic participation, social mobility and environmental sustainability. It will also examine the barriers to achieving financial inclusion and the policies needed to overcome these challenges [1].

Description

Financial inclusion is defined as the process of ensuring that individuals and businesses, particularly from disadvantaged groups, have access to useful and affordable financial products and services. These include savings accounts, credit, insurance and payment services. In many developing countries, people living in rural areas or those with low incomes face significant barriers to accessing these services. These barriers include the lack of nearby financial institutions, high costs, limited digital access and insufficient financial literacy. Without access to formal financial services, people are forced to rely on informal financial systems, which are often inefficient and predatory [2].

Financial inclusion plays a key mediating role in sustainable growth by facilitating the flow of capital and resources to individuals and businesses that have traditionally been excluded from economic systems. When people can access financial products such as loans, they can invest in education, health and small businesses activities that are essential for long-term prosperity and poverty reduction. Access to financial services empowers individuals, enabling them to smooth consumption, save for the future and manage risks. Microloans and small-scale savings accounts can directly reduce poverty by helping individuals start small businesses, which, in turn, contribute to local economic growth and employment creation [3].

The link between financial inclusion and sustainable growth is also evident in its ability to reduce inequality. By providing marginalized populations with access to credit and savings options, financial inclusion reduces the wealth gap between rich and poor. Women, in particular, benefit from greater financial inclusion, as they often face barriers to accessing financial resources. When women are financially included, they can invest in education, healthcare and businesses, which have a ripple effect on family well-being and broader economic development. Moreover, financial inclusion fosters entrepreneurship by providing Small And Medium-Sized Enterprises (SMEs) with the capital they need to grow and innovate. SMEs are crucial for job creation and driving innovation, especially in developing economies. Financial inclusion not only improves access to financing for businesses but also allows entrepreneurs to invest in new technologies, improve production efficiency and tap into new markets. These factors contribute to economic diversification and long-term, sustainable economic growth.

Additionally, financial inclusion supports environmental sustainability by enabling the financing of green projects and sustainable businesses. As the world increasingly focuses on mitigating climate change and adopting sustainable production practices, access to financing is crucial for businesses involved in renewable energy, sustainable agriculture and eco-friendly technologies. Financial inclusion, therefore, plays a role in driving investments that support environmental sustainability and promote a green economy [4].

However, despite its significant potential, financial inclusion faces various challenges. Key barriers include limited infrastructure in rural areas, lack of digital access for remote populations and resistance from traditional financial institutions that view serving low-income individuals as costly or unprofitable. The digital divide further exacerbates these issues, as digital financial services are often inaccessible to those without smartphones or internet access. Moreover, low financial literacy among the population can prevent people from fully benefiting from the available financial services. Addressing these challenges requires concerted efforts from governments, financial institutions and international organizations to create a supportive environment for financial inclusion through regulatory reforms, investment in infrastructure and public education initiatives [5].

Conclusion

In conclusion, financial inclusion plays a vital mediating role in achieving sustainable growth by ensuring that all individuals, regardless of their socioeconomic background, have access to the financial services necessary for improving their lives and contributing to the economy. It helps to reduce poverty, narrow income inequality, foster entrepreneurship and promote social mobility. Through financial inclusion, individuals can access credit, savings and insurance, enabling them to manage risks, invest in their future and engage in economic activities that drive growth. Furthermore, it supports environmental sustainability by enabling investments in green technologies and businesses focused on sustainability.

However, to fully realize the potential of financial inclusion, several challenges must be overcome, including improving infrastructure, increasing financial literacy and expanding digital access. With the right policies and collaborative efforts from governments, financial institutions and international organizations, financial inclusion can be scaled up, ensuring that it plays a key role in fostering equitable, inclusive and sustainable growth. As such, financial inclusion is not just a means of addressing financial exclusion, but a critical driver of long-term, sustainable development for all.

Acknowledgment

None.

Conflict of Interest

None.

References

1. Qiu, Hongfeng, Suwei Weng and Michael Shengtao Wu. “The mediation of news framing between public trust and nuclear risk reactions in post-Fukushima China: A case study.” J Risk Res 24 (2021): 167-182.

   Google Scholar, Crossref, Indexed at

2. Chavadi, Chandan A., Monika Sirothiya and Vishwanatha MR. “Mediating Role of Job Satisfaction on Turnover Intentions and Job Mismatch Among Millennial Employees in Bengaluru.” Bus Persp Res 10 (2022): 79-100.

   Google Scholar, Crossref, Indexed at

3. Muppidathi, Ponmythili and Venkat R. Krishnan. “Transformational Leadership and Follower’s Perceived Group Cohesiveness: Mediating Role of Follower’s Karma-yoga.” Bus Persp Res 9 (2021): 269-285.

   Google Scholar, Crossref, Indexed at

4. Bazzoli, Andrea and Matteo Curcuruto. “Safety leadership and safety voices: exploring the mediation role of proactive motivations.” J Risk Res (2020): 1-20.

   Google Scholar, Crossref, Indexed at

5. Stede, Wim A. Van der, Chee W. Chow and Thomas W. Lin. “Strategy, choice of performance measures and performance.” Behav Res Accounting 18 (2006):185-205.

   Google Scholar, Crossref, Indexed at