However, the link between inclusion and stability – or more appropriately, between reducing exclusion and increasing instability – may not be unique. This makes it difficult to be precise. Nonetheless, two possibilities may be considered. First, financial market failures are often premised on information asymmetries. Incorporating new agents into the formal market will likely increase information asymmetries.
This is more so the case with stakeholders whose access to and use of information is not the same as those in the mainstream market. Second, there is regulatory arbitrage. The “tailor fitting” of guidelines that is inherent to financial inclusion may create an unintended imbalance in incentives. This becomes a point of arbitrage, if not market pressure. These two scenarios are certainly possible.