Financial Inclusion and Bank Stability in Zimbabwe

Abstract

The relevance of financial inclusion is increasing rapidly as it is becoming a policy issue especially in developing countries. However, financial inclusion can cause stability or fragility in the financial sector. The nexus between the two has to be clarified before fostering major strategies of financial inclusion. This study employed a system Generalised Method of Moments (GMM) to investigate this relationship. The results of this study suggest that financial inclusion can increase stability in the banking sector. This entails a positive, holistic approach towards implementation of agenda 2016-2020. In essence, financial inclusion is designed to bring about capacity to the economically and socially excluded population by creating equal opportunities. In order to achieve a sustainable financial inclusion framework there is need for viable business models (such as mobile money services), efficient, cheap and non-complicated technology contained in an appropriate regulatory approach by the Central Bank.