Evaluating the Effectiveness of Financial Inclusion Policies on Economic Growth and SME

Abstract

This academic paper is a behavioral and technological study focusing on the influence of financial inclusion policies on economic growth and on the development of small and medium-sized enterprises (SMEs) in emerging economies. The paper utilizes a qualitative case study approach to substantiate the claim, employing Prospect Theory to measure the effects of increased access to financial services on the rate of employment, poverty alleviation, and SME survival. The study notes that while the use of digital finance and the launch of initiatives for women can be a source of profit and job creation, there are still obstacles such as very low levels of financial literacy, the need for collateral, mistrust, and social biases. The results show that changes in procedures, regulatory changes and well-targeted educational programs are the main ways of closing financial gaps, particularly for vulnerable SMEs and female entrepreneurs. The conclusions of the paper are further supported by a re-examination of the literature on global research that points to the increasing role of digital financial inclusion and fintech that are the major drivers of SME-led economic progress.