As the balance sheet of the financial sector grows more diversified and encompasses a broader spectrum of economic agents, its contribution to a more resilient economy is commensurately higher. Second, for financial institutions, especially banks, financial inclusion helps provide a more stable retail base of deposits.
As the recent global crisis also demonstrated, stable retail sources of funding as against reliance on borrowed funds can greatly enhance the soundness and resilience of financial institutions and can reduce volatility in earnings. Low income savers and borrowers tend to maintain steady financial behaviour through the business cycle both in terms of deposit keeping and borrowing.