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  1. Home
  2. Building Resilience
  3. Economic
  4. Financial Inclusion

Economic

  • Financial Inclusion
  • Access to Markets
  • Livelihood Diversification

Financial Inclusion

Interventions that increase access to financial tools like insurance, credit, and digital payment systems help strengthen resilience for poor individuals.

Financial services include credit, savings, insurance, payment mechanisms, and transaction accounts. Services such as these make it possible to move resources across time and space — from good years to bad, from locations with normal conditions to others suffering from natural disasters. Financial inclusion allows for broad-based participation of poor and marginalized groups in processes that facilitate transfers of funds between individuals, groups, and financial institutions. Removing barriers to accessing financial tools helps smooth consumption in the face of unexpected setbacks. Informal financial systems also play an important role, especially in the immediate aftermath of a crisis.

Approach

Digital payments expand the social network able to send money in times of crisis. They also increase the efficiency and targeting of cash transfer programs. Removing cost and behavioral barriers to savings accounts enables households to limit reductions in consumption during crises. Insurance is often in low demand among poor households. However, it can potentially help households better manage food security and income shocks.

Evidence

Interventions addressing financial market failures — e.g., through insurance or credit/grants — increase resilience for poor individuals. Studies suggest index-based livestock insurance can build household resilience among herders. Combining technical training with asset transfers may also build household resilience. Research suggests informal financial systems are more important than formal finance in immediate aftermath of disaster.

More About Financial Inclusion

Technical Guidance

How Disaster Risk Finance Can Link with Social Protection: Maximizing the Effectiveness of Shock Response

13 Jul 2023 - Social Protection Approaches to COVID-19: Expert Advice (SPACE)

Take a look at three guiding principles for linking disaster risk finance to existing methods to create shock-responsive social protection.

View Resource
Assessment

Disaster Risk Financing and Social Protection

13 Jul 2023 - UNICEF

With disaster risk financing, East Asian and Pacific social protection systems can be more responsive in times of crisis.

View Resource
Event

Financing Adaptive Social Protection for Drought in Malawi to Protect the Vulnerable

25 Jul 2023, GMT -4 - ResilienceLinks , USAID , World Bank Group

Learn how Malawi used disaster risk financing to support their adaptive social protection efforts.

View Event
Tools & Guidance

Charting a Course toward Universal Social Protection

27 Jun 2023 - World Bank Group

Explore the urgent need for an updated World Bank social protection strategy in the rapidly changing global context.

View Resource
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