Redrawing Boundaries of Financial Systems for Mountain Economies

March 12, 2014

This is a study of access to finance in the Eastern Himalayan region of India, an area characterized by underdevelopment, low productivity, sparse population, ethnic diversity, and subsistence agriculture. Not surprisingly, under these conditions, financial inclusion has been extremely limited.

A central hypothesis is that the region’s unresponsive policies and financial system severely constrain the growth of financial services, for which the field research found extensive supporting evidence. Across the various livelihood patterns of the region, there is high level of exclusion from basic banking and insurance services, with all the negative consequences.

The study finds, however, strong potential to offer meaningful financial services to the region’s households provided that they are thoughtfully designed, addressing specifically the needs and risks of livelihood patterns of the mountain economy. This will be a new kind of knowledge-driven banking that can advance financial inclusion for even the poorest households in one of the most unpromising economic regions in the developing world.

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