There are many anecdotal instances of high interest rates leading to households being caught in a debt trap in our own country while the impact on financial stability of increased leverage of households was succinctly demonstrated by the recent crisis in the microfinance sector.
Financial inclusion can improve the access to finance and the quality and cost of the service that small businesses receive from banks. These factors are key to the profitability and prosperity of these businesses and that of the economy. Research has revealed increased formal savings can help reduce cost of credit and facilitate business expansion, for example, through increased availability of low cost deposits.