The Use of Microfinance to Mitigate Financial Exclusion

Przemysław Pluskota


Objective: The problem of financial exclusion is closely correlated to the development of the financial market, also in the regional aspect. In less developed countries ignored by commercial financial institutions, the only chance for the community lies with local financial institutions focused on the implementation of social goals. These can be, for example, microfinance institutions focused on serving poor and socially excluded people. Currently, microfinance institutions run their operations all over the world, in the richest countries and in poor ones. The aim of this article is to define and present the problem of financial exclusion and to examine microfinance as a way of mitigating the problem. Microfinance helps to mitigate financial exclusion, enabling social inclusion for many people via financial products tailored to their needs.

Research Design & Methods: The research offers conclusions based on analysis of data and reports published by microfinance institutions and deductive and inductive reasoning.

Findings: The research results show that financial inclusion plays a vital role in economic development and poverty alleviation. In order to improve access and usage of banking products, it is also necessary to increase financial awareness and knowledge. MFIs should strive to achieve social goals.

Implications/Recommendations: Microfinance institutions all over the world should strive to achieve social goals through a wide range of microfinance products, and not only through microcredit. In order to increase the impact of microfinance institutions and achieve social goals, a scenario for the functioning of MFIs was proposed. This scenario assumes co-implementation of social and commercial goals, which is a condition of retaining the idea of microfinance.

Contribution: The article presents the proposed model of microfinance activity which takes into account social goals and the digitisation of activities.


financial exclusion, microfinance institutions, microfinance, poverty

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