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Independent research for global prosperity

A Decision Tree for Digital Financial Inclusion
A new analytical framework to unravel the root causes of low financial inclusion.
About the Project
The Decision Tree framework presents a new methodology, adaptable to country-specific settings, that will help policymakers, researchers, and other stakeholders to diagnose the binding constraints, the limiting factors, impeding further digital financial inclusion.

Financial inclusion can be a catalyst for economic development and a source of economic empowerment, especially through digital means, which lower costs and facilitate access. However, in developing and emerging countries, not even half of the population uses digital payment services—the simplest digital financial service (DFS) and a door to further inclusion. And in some countries, less than 25 percent use these digital payments.

Most countries have enacted ambitious and all-encompassing national financial inclusion strategies and other significant efforts. While some have achieved substantial progress, many others continue to fall short of expectations. Policymakers often lack the necessary analytical tools for identifying the most pressing constraints to digital financial inclusion—these impediments are where they should be focusing their efforts and where solutions should be prioritized.

CGD developed a methodology to fill this gap and offer policymakers this much needed tool. Applied in five initial case studies (in Ethiopia, India, Indonesia, Mexico, and Pakistan), this deductive approach, based on the study of the fees and costs to access the service and other indicators, helps analysts to discard potential irrelevant constraints and find those whose relaxation could unleash the potential of digital financial inclusion.  

Policymakers, researchers, and other stakeholders can use the materials from this country-specific diagnostics framework to disentangle the root causes of low financial inclusion and develop efficient and effective policy solutions.

Blogs

  • The Strange Case of Low Financial Inclusion Using Digital Payment Services in...
    by Ivonne Acevedo et al.
    Mexico followed, in past years, what appeared to be a textbook formula for expanding access to and use of digital financial services for its citizens. And yet, less than...
  • India May Not Have As Much Digital Financial Inclusion As It Seems
    by Nandini Harihareswara et al.
    India’s efforts to expand financial inclusion by leveraging digital technologies have been much publicized and lauded, both within India and internationally. But how effective...
  • Where Policy and Research Meet: Takeaways from Workshops on CGD's New Policy...
    by Liliana Rojas-Suarez et al.
    On October 10, CGD, in collaboration with the Alliance for Financial Inclusion (AFI), held a workshop in Mexico City to discuss CGD’s innovative tool that serves to...
  • Branch to Root: A New ‘Decision Tree’ Tool to Improve Financial Inclusion
    by Liliana Rojas-Suarez
    Despite a broad recognition that increased access to financial services can bring significant benefits to the poor, catalyzing economic development, financial inclusion in...

Publications

  • Binding Constraints on Digital Financial Inclusion in Indonesia: An Analysis...
    by Firman Witoelar et al.
    Despite the concerted efforts of the Indonesian government to increase financial inclusion and the e-commerce–led growth of digital payment services, a large proportion of the...
  • Building Digital Financial Inclusion: A Decision Tree Approach
    by Liliana Rojas-Suarez et al.
     A Decision Tree for Digital Financial Inclusion Policymaking is a comprehensive analytical framework to diagnose the factors significantly impeding improvements in digital...
  • Identifying Binding Constraints on Digital Payment Services in Ethiopia: An...
    by Getnet Alemu et al.
    While several comparable countries in sub-Saharan Africa have seen a significant increase in financial inclusion, mainly driven by digital financial services, Ethiopia still...
  • A Decision Tree for Digital Payment Services: The Case of Mexico
    by Ivonne Acevedo et al.
    This paper explores the reasons why digital payment services in Mexico are used to a much lower extent than would be expected considering the country’s level of development...
  • Searching for the Binding Constraint to Digital Financial Inclusion in...
    by Imran Khan et al.
    Over the last decade, Pakistan has seen improvements in the coverage of its networks of bank branches, ATMs, and mobile money agents. However, the country is lagging behind...
  • An Analysis of the Binding Constraints on Digital Financial Inclusion in...
    by Nandini Harihareswara et al.
    The past decade has seen significant innovation and growth in the volume and value of digital payments in India. However, we find that the associated gains have been heavily...

Events

Branch to Root: Event on CGD's Decision Tree Tool
Over 1 billion adults are digitally financially excluded Ethiopia, India, Indonesia, Mexico, and Pakistan. Further, in most emerging and developing economies, more than 50...

Blogs

  • The Strange Case of Low Financial Inclusion Using Digital Payment Services in...
    by Ivonne Acevedo et al.
    Mexico followed, in past years, what appeared to be a textbook formula for expanding access to and use of digital financial services for its citizens. And yet, less than...
  • India May Not Have As Much Digital Financial Inclusion As It Seems
    by Nandini Harihareswara et al.
    India’s efforts to expand financial inclusion by leveraging digital technologies have been much publicized and lauded, both within India and internationally. But how effective...
  • Where Policy and Research Meet: Takeaways from Workshops on CGD's New Policy...
    by Liliana Rojas-Suarez et al.
    On October 10, CGD, in collaboration with the Alliance for Financial Inclusion (AFI), held a workshop in Mexico City to discuss CGD’s innovative tool that serves to...
  • Branch to Root: A New ‘Decision Tree’ Tool to Improve Financial Inclusion
    by Liliana Rojas-Suarez
    Despite a broad recognition that increased access to financial services can bring significant benefits to the poor, catalyzing economic development, financial inclusion in...

Publications

  • Binding Constraints on Digital Financial Inclusion in Indonesia: An Analysis...
    by Firman Witoelar et al.
    Despite the concerted efforts of the Indonesian government to increase financial inclusion and the e-commerce–led growth of digital payment services, a large proportion of the...
  • Building Digital Financial Inclusion: A Decision Tree Approach
    by Liliana Rojas-Suarez et al.
     A Decision Tree for Digital Financial Inclusion Policymaking is a comprehensive analytical framework to diagnose the factors significantly impeding improvements in digital...
  • Identifying Binding Constraints on Digital Payment Services in Ethiopia: An...
    by Getnet Alemu et al.
    While several comparable countries in sub-Saharan Africa have seen a significant increase in financial inclusion, mainly driven by digital financial services, Ethiopia still...
  • A Decision Tree for Digital Payment Services: The Case of Mexico
    by Ivonne Acevedo et al.
    This paper explores the reasons why digital payment services in Mexico are used to a much lower extent than would be expected considering the country’s level of development...
  • Searching for the Binding Constraint to Digital Financial Inclusion in...
    by Imran Khan et al.
    Over the last decade, Pakistan has seen improvements in the coverage of its networks of bank branches, ATMs, and mobile money agents. However, the country is lagging behind...
  • An Analysis of the Binding Constraints on Digital Financial Inclusion in...
    by Nandini Harihareswara et al.
    The past decade has seen significant innovation and growth in the volume and value of digital payments in India. However, we find that the associated gains have been heavily...

Events

Branch to Root: Event on CGD's Decision Tree Tool
Over 1 billion adults are digitally financially excluded Ethiopia, India, Indonesia, Mexico, and Pakistan. Further, in most emerging and developing economies, more than 50...

Contact

For more information, contact afioritobaratas@cgdev.org.

Contact

For more information, contact afioritobaratas@cgdev.org.

Experts

Alejandro Fiorito
Alejandro Fiorito is a research assistant for Liliana Rojas-Suarez at the Center for Global Development. Fiorito holds an MA in International Economics and Finance from Johns...
Liliana Rojas-Suarez
Liliana Rojas-Suarez is the Director of the Latin America Initiative and a senior fellow at the...

Experts

  • Alejandro Fiorito
    Alejandro Fiorito is a research assistant for Liliana Rojas-Suarez at the Center for Global Development. Fiorito holds an MA in International Economics and Finance from Johns...
  • Liliana Rojas-Suarez
    Liliana Rojas-Suarez is the Director of the Latin America Initiative and a senior fellow at the...

Acknowledgments

For more information, visit CGD's How We're Funded page.
For more information, visit CGD's How We're Funded page.